Saudi Arabia: Updated VAT on deemed suppliers guidelines; amendments to excise tax on sweetened beverages

The KPMG member firm in Saudi Arabia prepared reports about the following indirect tax developments:

• The Zakat, Tax, and Customs Authority (ZATCA) on December 25, 2025, issued guidelines clarifying the special-case rules for the application of value added tax (VAT) on deemed suppliers in relation to online marketplace (OMP) businesses. The clarified deemed supplier rules require online marketplace operators to enhance supplier verification, maintain residency records, and adjust contractual and invoicing practices to meet VAT compliance requirements. Read a January 2026 report
• 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) updated the implementing regulations of the excise tax law. The amendments introduced a tiered volume-based excise tax model for sweetened beverages. Carbonated drinks now fall under the category of sweetened beverages, when 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% on retail selling price. These updates were published in the Official Gazette on December 29, 2025, and are effective from January 1, 2026. Read a January 2026 report