Saudi Arabia to Begin Collecting Tax on Cigarettes, Soft Drinks on June 10

Published May 28th, 2017 - 09:47 GMT
Saudi Arabia and other GCC countries target several items with the new selective tax, including tobacco products and energy drinks. (Pixabay)
Saudi Arabia and other GCC countries target several items with the new selective tax, including tobacco products and energy drinks. (Pixabay)

Saudi Arabia announced on Saturday that the selective tax (ST) will be implemented from June 10 and the value-added tax (VAT) from January 1.

The selective taxes that will be implemented by all Gulf countries target several items, including tobacco products and power drink by 100 percent, and fizzy drinks by 50 percent.

The Saudi Zakat Authority is responsible for collecting the VAT and ST, ensuring that all taxpayers comply with relevant laws and that no one evades taxes. It applies international standards for tax collection and uses state-of-the-art technology to ensure precision and accuracy.

If registered people (traders, importers etc.) fail to present a tax declaration to the General Authority of Zakat and Tax, then they will be penalized by a fine ranging between 5 percent and 25 percent of the tax value.

Those who withhold information or violate regulations or obstruct Zakat Authority’s employees from carrying out their duties will be fined up to SR50,000.

Those who import or produce commodities liable to selective tax and do not register the required information with the Authority will be considered as tax evaders.

Besides the selective taxes, the Saudi Cabinet approved in January a unified agreement on VAT in GCC states. Saudi Arabia’s 2017 state budget recommended a 5 percent VAT from 2018, without any change in the prices.

The selective tax revenues will reach SR7 billion in six months, according to Al-Eqtesadiyah business daily.

There are 630 manufacturing companies and importers in the local market registered with the selective commodities regulations. Of these 350 are big companies and 280 are small importers.

The Board of Directors of the Zakat Authority is scheduled to meet on Wednesday to issue and announce the executive bylaws.

By Abdul Rahman Al-Misbahi


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