# Excise Tax in Saudi Arabia 2026: Rates, Goods and Filing
*A complete guide to excise tax on tobacco, energy drinks and sweetened beverages: the official rates, the new tiered volumetric approach, registration, filing and penalties.*

> **In short:** Saudi excise tax 2026: 100% on tobacco and energy drinks, 50% on soft and sweetened drinks, the new tiered volumetric approach, plus filing and penalties.

- **URL:** https://www.snad.io/en/blog/dareebat-al-salaa-al-intiqaiyya-saudi
- **Arabic original:** https://www.snad.io/blog/dareebat-al-salaa-al-intiqaiyya-saudi
- **Category:** Guides — Tax & Zakat
- **Tags:** excise tax, selective goods tax, Zakat, Tax and Customs Authority, ZATCA, energy drinks, sweetened beverages, tobacco, taxes
- **Published:** 2026-05-25
- **Updated:** 2026-08-02
- **Publisher:** Snad (snad.io)

Excise tax in Saudi Arabia is an indirect tax levied on specific goods that harm health, at two rates only: 100% on tobacco, energy drinks, and electronic smoking devices and their liquids, and 50% on soft drinks and sweetened beverages. From 1 January 2026, the tiered volumetric approach applies to sweetened beverages, tying the tax to sugar content rather than a flat rate. There is no minimum registration threshold: every producer and importer must register, and returns are filed every two months. The tax is calculated on the retail selling price before Value Added Tax, and both taxes can apply to the same product. The source is the Zakat, Tax and Customs Authority (zatca.gov.sa).

## What excise tax is and why it was introduced

Excise tax is an indirect tax levied on specific goods that carry harmful effects for public health or the environment. It has a dual purpose: **reducing consumption of those goods** while at the same time **generating revenue for the state** that is directed to public services.

Saudi Arabia applied it from June 2017 under the GCC Excise Tax Agreement. It differs from Value Added Tax in that it applies to a narrow category of goods only, and at very high rates (reaching 100%).

The responsible body is the **Zakat, Tax and Customs Authority (ZATCA)**, which sets the taxable goods, the rates, and the calculation and filing mechanism through the Implementing Regulations of the Excise Tax Law published on zatca.gov.sa.

## Taxable goods and the official rates

Taxable goods fall into two categories by rate:

| Good | Rate |
|---|---|
| Tobacco products and their derivatives (cigarettes, cigars, shisha, chewing tobacco) | 100% |
| Energy drinks | 100% |
| Electronic smoking devices and tools, and the liquids used in them | 100% |
| Soft drinks | 50% |
| Sweetened beverages (containing added sugar or sweetener) | 50% |

**Exclusions from sweetened beverages**: 100% natural juices with no added sugar, milk and infant formula, and medical and dietary products approved for therapeutic purposes. Plain water falls outside the scope, so no tax applies to it.

**Important**: the rate is calculated on the **retail selling price** (or the reference price set by the Authority, whichever is higher), before Value Added Tax is added.

## The new tiered volumetric approach for sweetened beverages in 2026

From **1 January 2026**, the Zakat, Tax and Customs Authority adopted a new method for calculating tax on sweetened beverages, known as the **tiered volumetric approach**.

**The idea**: instead of a flat 50% on every sweetened drink regardless of how much sugar it contains, the new approach ties the amount of tax to **the sugar content per 100 ml**. The more sugar in the drink, the higher the tax due on it.

**What this means in practice for traders and manufacturers**:

- Low-sugar drinks bear less tax, and some of them may become more competitive.

- High-sugar drinks bear more tax, which may raise their price for the consumer.

- Producers and importers need **precise documentation of the sugar content** in every product, because that is now the basis for calculating the tax rather than mere nutrition data.

The stated goal is to encourage reformulating products to reduce sugar, in line with national health targets. Review the explanatory guide to the tiered volumetric approach on the Authority's website for the updated tiers and values before you set prices.

## Excise tax versus Value Added Tax

Many business owners confuse the two taxes even though they differ fundamentally:

| Aspect | Excise tax | Value Added Tax |
|---|---|---|
| Scope of goods | A narrow category (tobacco, energy drinks, sweetened beverages) | Almost all goods and services |
| Rate | 50% or 100% | 15% |
| Purpose | Curbing harmful goods | Broad general revenue |
| Point of levy | Once, at production or import | At every stage of the supply chain |
| Filing | Every two months | Monthly or quarterly depending on revenue |

One important point: **the two taxes can apply to the same product**. An energy drink is charged 100% excise tax first, then Value Added Tax of 15% is calculated on the price including the excise tax. That makes the total tax burden high, and it calls for an accounting system that separates the two taxes clearly on the invoice.

## Who must register for excise tax

Unlike Value Added Tax, **there is no minimum registration threshold** for excise tax. Anyone carrying out one of the following activities involving excise goods must register with the Authority, regardless of the size of their business:

1. **The producer** inside the Kingdom (an energy drink or sweetened beverage plant, a tobacco factory).

2. **The importer** bringing excise goods in from outside the Kingdom.

3. **The tax warehouse operator** whose warehouse stores the goods under duty suspension.

4. Anyone holding excise goods that have left duty suspension without the tax due being paid.

The ordinary retailer who buys the product at a price that already includes excise tax (after the importer or producer has paid it) does not normally register, because the tax was settled earlier in the chain. Even so, the retailer must make sure their suppliers are compliant and their invoices are correct.

## How excise tax is calculated, with a worked example

**The basic formula**:

Excise tax = taxable value × the rate for the good

The taxable value is the higher of: the announced retail selling price, or the standard reference price the Authority publishes for certain goods.

**Example — a can of energy drink**:

- Retail selling price before taxes: SAR 10

- Excise tax (100%): SAR 10

- Total after excise: SAR 20

- Value Added Tax (15% on 20): SAR 3

- **Final price to the consumer: SAR 23**

**Example — a bottle of soft drink**:

- Selling price before taxes: SAR 4

- Excise tax (50%): SAR 2

- Total: SAR 6

- Value Added Tax (15% on 6): SAR 0.90

- **Final price: SAR 6.90**

Note that Value Added Tax is calculated on the value **including** excise tax, which is a common error in manual pricing.

## Filing, payment and tax warehouses

**Filing frequency**: the excise tax return is filed **every two months** through the Zakat, Tax and Customs Authority's online portal, and the tax due is paid when the return is submitted.

**The tax warehouse**: a facility approved by the Authority where excise goods are stored under **duty suspension**, meaning the tax falls due only when the goods are released for local consumption. It helps large producers and importers improve cash flow, because the tax is not paid until the actual sale.

**Compliance requirements**:

- Keep accurate records of the quantities produced, imported, sold and damaged.

- Run periodic counts of taxable inventory and reconcile them against the returns.

- Retain the documents for no less than 6 years for retrospective audit.

- Disclose any damage or loss of excise goods in line with the Authority's procedures.

## Penalties for violations

The Authority has set strict penalties for excise tax violations, including:

- **Failure to register** when registration is required: a substantial financial fine on top of the tax due.

- **Tax evasion** (concealing taxable goods, false declarations): a fine that may reach three times the value of the evaded tax, with the possibility of criminal prosecution.

- **Late filing or late payment**: proportional fines for each period of delay.

- **Holding excise goods on which the tax has not been paid**: possible confiscation along with fines.

Given how high the rates are (up to 100%), any error in calculation or stock counting compounds financially very quickly. Precise compliance is not an option but a necessity that protects the business from serious financial and legal risk.

## How Snad helps you manage excise tax

Snad links inventory and sales to tax calculation automatically:

- **Separating the two taxes on the invoice**: excise tax is calculated first, then Value Added Tax on the inclusive value, in an invoice format compliant with the Zakat, Tax and Customs Authority.

- **Tracking taxable goods**: excise products are flagged in the item catalogue along with their rate, so tax is never charged on the wrong item or missed on another.

- **Quantity records for the return**: reports of what was produced, imported, sold and damaged, ready to fill in the two-monthly return without manual collation.

- **Stock reconciliation**: physical inventory compared against recorded inventory to surface any discrepancy before it turns into a violation.

- **Deadline alerts**: a reminder ahead of the final date for filing and payment.

The 30-day free trial is enough to set up an item catalogue that separates excise goods and to see how the two taxes are calculated together on the invoice with precision.

## Frequently asked questions

### What is the excise tax rate in Saudi Arabia?

The rates are: 100% on tobacco products, energy drinks, and electronic smoking devices and their liquids, and 50% on soft drinks and sweetened beverages. They are calculated on the retail selling price before Value Added Tax.

### What has changed in the tax on sweetened beverages from 2026?

From 1 January 2026 the tiered volumetric approach applies, tying the amount of tax to the sugar content per 100 ml instead of a flat rate. The more sugar, the higher the tax, which requires documenting the sugar content in every product.

### Do excise tax and Value Added Tax apply together?

Yes. On excise goods the excise tax is calculated first, then Value Added Tax of 15% is calculated on the price including the excise tax, which makes the total tax burden high.

### Is there a minimum registration threshold for excise tax?

No. Unlike Value Added Tax, there is no minimum. Any producer, importer or tax warehouse operator dealing in excise goods must register regardless of the size of their business.

### How often is the excise tax return filed?

Every two months (a two-month cycle) through the Zakat, Tax and Customs Authority portal, with the tax due paid when the return is submitted.

### Does a retailer register for excise tax?

Usually not, if they bought the product at a price that includes excise tax already paid earlier in the chain. Even so, they must make sure their suppliers are compliant and their invoices are correct, because they may be held answerable for holding goods on which tax has not been paid.

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