EXCISE GOODS TAX LAW

Saudi Arabia enacted Royal Decree No. (M/86) dated 27/8/1438 AH, the Excise Tax Law, within the framework of Saudi Arabia Corporate Laws & legislation, which went into effect on 11 June 2017 under the Gulf Cooperation Council States’ Common Excise Tax Agreement.

In the Kingdom of Saudi Arabia, the Excise Tax is an indirect tax applied on specified items. The Tax is often not charged directly on the final sale of products to the end purchaser/consumer of Excise items but is collected from the producer, the importer (the source), or an intermediary. The amount of Tax collected on the Excise commodity is usually included in the price of future sales, including the final purchaser.

The purpose of the Law is to discourage and minimise the use of certain commodities deemed hazardous to human health.

AMENDMENTS TO THE EXCISE GOODS TAX LAW

Some of the key amendments to the Excise Tax Law include:

The Governor may authorise a request to suspend the payment of excise tax for a period not exceeding 45 days as an exception to the requirements indicated in paragraph 2 of Article 18 of the Excise Tax Implementing Regulations.
The modifications include a new Article 37 that provides criteria and standards that must be met before a location may be designated for the disposal of non-consumable excise items.
The revisions add a new paragraph to Article 52, creating the entitlement to reimbursement of paid Excise Tax on excise items that are (or become) non-consumable after being introduced into circulation. Article 52 further specifies the requirements that must be followed for the taxpayer to be eligible for a refund.

ISSUER OF THE EXCISE GOODS TAX LAW

The Excise Goods Tax Law in Saudi Arabia was issued by the Saudi Arabian government. Specifically, it was approved and enacted by the Council of Ministers of Saudi Arabia. This law, which came into effect on June 11, 2017, introduced excise taxes on certain goods and products as part of the Kingdom’s efforts to diversify revenue sources and promote healthier consumer choices. The Excise Goods Tax Law is administered by the General Authority of Zakat and Tax (GAZT) in Saudi Arabia, which oversees tax-related matters in the country.

WHO IS SUBJECT TO THE ‘EXCISE GOODS TAX LAW’?

The UAE has implemented an excise tax on various items, including tobacco, energy drinks, and sugary beverages. The rates for excise taxes are as follows:

Tobacco Products: In the UAE, tobacco products face a 100% excise tax based on their retail price.
Energy Drinks: Energy drinks, categorised as stimulants for the body and mind, are subject to a 100% excise tax in the UAE, effectively doubling their retail price.
Carbonated Drinks: Except for aerated water, all carbonated beverages are considered for a 50% excise tax. This translates to the tax amounting to 50% of the suggested retail price.
Electronic Smoking Devices and Liquids: Both the liquid used in electronic smoking devices and the devices themselves, regardless of nicotine content, are subject to a 100% excise tax.

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EXCISE GOODS TAX LAW