Saudi importers, wholesalers accused of hoarding as new tobacco tax comes into effect

Retailers in Saudi Arabia have accused importers and wholesale suppliers of hoarding to make profits as the country approaches the introduction of new 100 per cent taxes on tobacco and unhealthy drinks.

Saudi Gazette cited Ahmed Al-Zahir, a retailer in the Eastern Province, as saying imported had started reducing supply a few months ago after learning about the tariff hike, which was scheduled to be implemented on June 10.

Read: Saudi to begin imposing tobacco, soft drinks tax in June

“These companies have reduced or partially stopped supply after the General Authority of Zakat and Tax decided to impose selective taxes on tobacco products,” he told the publication.

Trader Ali Al-Ahmed was also quoted as saying some shops were stocking cigarettes and beverages in their warehouses to sell them under the new tariff prices for large profits.

This came on top of reported shortages of stock as consumers sought to bulk buy ahead of the new tariffs

Saudi Arabia’s ministry of commerce and investment has promised to punish companies caught hoarding products, denying sales or increasing prices before the introduction of the tax.

The alleged methods of importers and wholesalers ahead of the tax’s introduction could be considered a lesson for the other Gulf states as they seek to introduce their own selective taxes in the coming months.

The other Gulf Cooperation Council countries, including the UAE, Bahrain, Oman, Kuwait and Qatar, have all agreed to impose selective taxes of 100 per cent on tobacco products and energy drinks and a 50 per cent tax on soft drinks but most have not announced an implementation date.