Saudi Arabia to Introduce Sugar-Content Based Tax on Sweetened Drinks from January 2026
Kingdom shifts from flat excise to tiered sugar-based system to promote health and encourage industry reformulation
Saudi Arabia has announced that it will begin applying a new sugar-content based tax on sweetened beverages from January 1, 2026, transitioning from its existing flat fifty percent excise tax to a tiered system that imposes higher levies on drinks with greater sugar content per one hundred millilitres.
The policy represents a significant evolution in the Kingdom’s fiscal and public health strategy, aligning taxation more closely with nutritional impact as part of wider efforts to reduce sugar consumption and address lifestyle-related health risks.
The revised framework will apply across a broad range of sweetened beverages, including carbonated soft drinks, energy drinks, flavoured juices, concentrates and powders that can be prepared as drinks.
Products with higher sugar concentrations will face higher tax rates, while low-sugar or sugar-free alternatives may be taxed at lower levels or exempted, creating a clear incentive for manufacturers to reformulate products and expand healthier options.
Saudi officials have described the policy as the result of extensive coordination between tax, health and industry authorities, as well as alignment within the Gulf Cooperation Council.
They said the new system balances public health priorities with industrial competitiveness, offering producers time to adapt while reinforcing national goals to curb obesity and diabetes.
The shift forms part of Saudi Arabia’s broader Vision 2030 agenda, which includes strengthening preventive healthcare and encouraging healthier consumer behaviour.
Authorities have indicated that a transition period and further guidance will be provided ahead of implementation, allowing businesses and consumers to prepare for the new tax regime before it takes effect at the start of 2026.
The policy represents a significant evolution in the Kingdom’s fiscal and public health strategy, aligning taxation more closely with nutritional impact as part of wider efforts to reduce sugar consumption and address lifestyle-related health risks.
The revised framework will apply across a broad range of sweetened beverages, including carbonated soft drinks, energy drinks, flavoured juices, concentrates and powders that can be prepared as drinks.
Products with higher sugar concentrations will face higher tax rates, while low-sugar or sugar-free alternatives may be taxed at lower levels or exempted, creating a clear incentive for manufacturers to reformulate products and expand healthier options.
Saudi officials have described the policy as the result of extensive coordination between tax, health and industry authorities, as well as alignment within the Gulf Cooperation Council.
They said the new system balances public health priorities with industrial competitiveness, offering producers time to adapt while reinforcing national goals to curb obesity and diabetes.
The shift forms part of Saudi Arabia’s broader Vision 2030 agenda, which includes strengthening preventive healthcare and encouraging healthier consumer behaviour.
Authorities have indicated that a transition period and further guidance will be provided ahead of implementation, allowing businesses and consumers to prepare for the new tax regime before it takes effect at the start of 2026.
