Amendments to the excise tax implementing regulations primarily impact sweetened beverages

In October 2025, the Gulf Cooperation Council (GCC) Financial and Economic Cooperation Committee approved changes to how excise tax is applied to sweetened beverages. In line with these changes, the Board of Directors of the Zakat, Tax and Customs Authority (ZATCA) has updated the Implementing Regulations of the Excise Tax Law. These updates were published in the Official Gazette on 29 December 2025 (view here) and are effective from 1 January 2026.

The amendments introduced a tiered volume-based excise tax model for sweetened beverages. Carbonated drinks now fall under the category of sweetened beverages, where previously they were treated as two separate categories. Under the new model, excise tax will be levied as a fixed amount per liter, determined by applicable tier based on sugar content per 100 ml of the ready-to-drink beverage (i.e., sugar concentration), replacing the earlier flat excise tax rate of 50 percent on retail selling price.

The key changes introduced by ZATCA to the excise tax regulations are provided below:

Sweetened beverages have been classified into four tiers based on sugar concentration, where each tier will have an applicable tax rate. A fixed amount of excise tax per liter will apply to the sweetened beverage depending on the sugar concentration. This tier-based approach is detailed below:

Excise tax on concentrates, powders, gels, or extracts will be calculated based on the sugar content and total liters of the final ready-to-drink beverage prepared according to the dilution instructions indicated on the product.

The deadline for filing excise tax returns and for the payment of excise tax due is now revised to be the end of the month following the relevant tax period, thereby replacing the previous deadline of 15 days following the relevant tax period.

A provision has been introduced allowing the refund of excess excise tax paid where subsequent amendments to the Excise Tax Law or implementing regulations result in a reduction of the excise tax payable, subject to prescribed conditions.

In addition to the above, ZATCA has introduced other procedural and compliance-related amendments and provided further clarification on various provisions of the excise tax implementing regulations.  

Manufacturers and importers of sweetened beverages (including carbonated drinks) should accurately assess and document product sugar content, review formulations and pricing models, and ensure correct excise tax reporting.

Immediate action is required to address product registration, supporting documentation, and contractual pricing, as inaccuracies may result in reassessments, supply chain disruptions, and compliance risks.

For detailed discussions regarding the impact of the amendments on your business, kindly contact our team of tax professionals.