GCC to Replace Flat 50% Beverage Tax With Four-Tier Sugar System

The Gulf Cooperation Council approved a new excise tax methodology for sweetened beverages, replacing the current flat 50% levy with a sugar-based, tiered system that will apply across the region from 2026. The revised approach calculates tax per litre based on total sugar content per 100 millilitres, aligning rates with how much sugar each drink contains.

The Zakat, Tax and Customs Authority outlined four bands. Tier 1 applies to drinks with 0 g of sugar that use artificial sweeteners only and carries a rate of SR 0 per litre. Tier 2 covers beverages with less than 5 g of sugar per 100 millilitres and is also set at SR 0 per litre. Tier 3 applies to products with 5 g to 7.99 g of sugar per 100 millilitres at SR 0.79 (USD 0.22) per litre. Tier 4 covers 8 g of sugar or more per 100 millilitres at SR 1.09 (USD 0.29) per litre. The framework links excise rates directly to sugar content and is designed to steer beverage formulations toward lower sugar levels.

Saudi Arabia will introduce the system at the beginning of 2026, following the completion of legislative and regulatory requirements. All Gulf Cooperation Council member states will adopt the methodology after finalising their respective processes. The scope covers ready to drink beverages as well as concentrates, powders, gels, extracts, and other formats intended to be converted into drinks, including products with added sugar, artificial sweeteners, or other sweetening agents.

The authority has opened a public consultation on proposed amendments to the Implementing Regulations through the Istitlaa platform and plans awareness workshops to support implementation.