Saudi Gazette report
RIYADH — Minister of Industry and Mineral Resources Bandar Alkhorayef announced that the new policy related to imposing selective tax on sweetened drinks will come into force starting January 1, 2026. He said that this issue, which was one of the major concerns raised by industrialists in the past, has now been resolved.
Alkhorayef clarified that addressing the sugar tax issue on beverages was a positive experience in negotiations between various entities, including the Ministry of Finance, the Zakat, Tax and Customs Authority, and the Ministry of Health.
He emphasized that the goal was to establish a policy that achieves a balance between preserving public health and reducing sugar consumption, while also allowing the industry to innovate and develop products.
The tax policy changes came after reaching a comprehensive agreement among the concerned parties, Alkhorayef said while noting that the issue was more complex due to its connection with coordination at the Gulf Cooperation Council (GCC) level.
The minister stated that the industrial sector in Saudi Arabia, like the rest of the world, faces ongoing challenges due to numerous changes and crises. “I was once an industrialist myself, and I know that the sector’s problems are endless, but the Kingdom has demonstrated its full commitment to cooperating with the private sector to address these challenges over the past years.”
The Financial and Economic Cooperation Committee of the Gulf Cooperation Council (GCC) adopted a decision last month to amend the methodology for calculating selective tax on sweetened beverages. Under the new tiered volumetric approach, the tax will be assessed according to graded bands determined by the total amount of sugar per 100 milliliters of ready-to-drink sweetened beverages falling within each bracket. This replaces the current flat-rate system, which imposes a fixed 50 percent selective tax on the retail price of sweetened beverages subject to the tax.
Sweetened beverages are defined as any products to which a source of sugar, artificial sweeteners, or other sweeteners have been added that are produced for consumption as a beverage. This includes beverages in all their forms, such as ready-to-drink beverages, concentrates, powders, gels, extracts, or any form that can be converted into a beverage.
Sugar tax on beverages is designed to discourage consumption and improve public health. In Saudi Arabia and the GCC, this involves a new tiered system based on sugar content, moving away from a flat-rate tax to a progressive one that applies a higher tax to drinks with more sugar per 100ml. The goals are to encourage companies to reduce sugar in their products, promote healthier consumer choices, and address health issues like obesity and dental decay.
