Saudi authorises finance minister to set soft drinks tax date

Saudi Arabia’s Council of Ministers has authorised the country’s minister of finance to set a date for the imposition of a tax on soft drinks, tobacco and other items, according to Saudi Press Agency.

The selective tax is part of a Gulf-wide initiative proposed at the GCC Supreme Council in 2015 but only approved by the finance ministry at the end of 2016.

No other Gulf States have announced when they will introduce the tax, but Qatar’s cabinet approved a draft law last week.

“Under the provision of the draft law, the selective tax will be imposed on goods harmful to human health and the environment, and the luxury goods produced domestically or imported and set forth in the table attached to the law, and in accordance with the tax rates specific to it,” according to Qatar News Agency.

It said amendments to the list of goods affected and their tax rates were possible.

The earliest date for implementation in Saudi Arabia is expected to be April.

Read: Saudi says soft drink, tobacco tax yet to be implemented

Saudi Arabia’s Fiscal Balance Program 2020 report, published by the government in December, said the kingdom would introduce a 50 per cent tax on soft drinks and a 100 per cent tax on tobacco and energy drinks.

Low prices of soft drinks and junk food have been blamed for rising rates of diabetes and obesity across the Gulf region.

Read: Counting the cost of type 2 diabetes on the UAE’s medical system

Last month Saudi Arabia’s cabinet also gave final approval for a region-wide value added tax that will be introduced from next year.

Read: Saudi Cabinet gives final approval for 5% VAT

The 5 per cent tax rate is expected to generate $25bn in annual revenues for GCC countries but will not apply to everyday essentials.

Read: VAT to generate $25bn in annual revenues for GCC countries