Saudi Arabia widens excise tax to sweetened drinks, E-Cigarettes

Sweetened drinks will be subject to a 50% levy. (Bloomberg pic)

RIYADH: Saudi Arabia will expand an excise tax charged on tobacco and soda to include electronic cigarettes and all drinks with added sugar as part of its efforts to boost non-oil revenue.

Sweetened drinks will be subject to a 50% levy, while e-cigarettes and their liquids will face a 100% tax, according to a document issued by the kingdom’s tax authority. The date of implementation hasn’t been determined yet.

The world’s largest crude exporter has introduced several new taxes and fees over the past few years as part of Crown Prince Mohammed bin Salman’s economic transformation plan, which calls for boosting non-oil revenue.

Although crude still accounted for about two-thirds of the government’s earnings last year, non-oil revenue has been growing steadily.

It jumped 46% in the first quarter compared with the same period last year, largely due to higher income from taxes on goods and services, including the excise levy.

The kingdom began imposing the excise tax in 2017, applying a 50% levy on soda and 100% on energy drinks and tobacco. Separately, the government introduced a 5% value-added tax in January 2018.