Excise tax is an indirect tax applied to selected goods deemed harmful to public health or the environment. It was introduced in Saudi Arabia in June 2017, in alignment with the Unified Agreement for Excise Tax for the GCC, and targets products such as tobacco, soft drinks, energy drinks, and electronic smoking devices, with varied tax rates.
The tax is levied on entities engaged in activities such as importing, producing, or releasing excise goods for consumption, but the tax cost is ultimately carried by consumers. Businesses dealing in excisable goods are required to register with ZATCA, submit excise returns on a bimonthly basis, and comply with applicable warehousing requirements. Excise tax supports the Kingdom’s efforts to promote healthier consumption habits and diversify non-oil revenue sources.
