Saudi Arabia will impose a 100 per cent tax on electronic cigarettes and a 50 per cent levy on some sugary drinks, broadening the excise duty on similar products enforced\u00a0in June 2017.<\/p>\n
The Arab world’s largest economy already has a 100 per cent excise duty on cigarettes and tobacco products, and a 50 per cent on energy drinks.<\/p>\n
The kingdom\u2019s General Authority for Zakat and Tax (Gazt) said it approved amendments to existing regulations on May 15. According to the guidance\u00a0published in\u00a0the official gazette on Saturday, a 100 per cent tax will be enforced\u00a0on e-cigarettes and its accompanying tools, and a 50 per cent tax on soft and sugary drinks.<\/p>\n
The new rules raise the typical cost of a can of Coca-Cola to 5 Saudi riyals, from 2.50 riyals currently, according to supermarket retailer Carrefour’s Saudi Arabia website. The authority will set the date for implementation of the new duties shortly, it said.<\/p>\n
The six-member GCC has pledged to introduce excise and other taxes including VAT, to boost non-oil revenues and reduce consumption of harmful products that cause diabetes, obesity and other health risks.<\/p>\n
Each country is implementing taxes at different times. The UAE imposed excise duty on certain items at the end of 2017 and is now considering the inclusion of\u00a0more products on its excise tax list, according to a statement by the Ministry of Finance in April.<\/p>\n
The ministry is conducting a joint study with officials in Saudi Arabia \u201con the addition of new goods to the selective tax list, as well as to determine tax rates on certain harmful substances”, it said.<\/p>\n
Prices of current applicable products including tobacco and its\u00a0byproducts, and carbonated and energy drinks,\u00a0have\u00a0doubled\u00a0in the UAE since the introduction of the levy.<\/p>\n
Saudi Arabia\u2019s excise tax aims to bolster non-oil revenues, as it implements a far-reaching package of\u00a0reforms under the Vision 2030 economic diversification agenda.<\/p>\n
The\u00a0measures have started to yield positive results. The International Monetary Fund estimates the kingdom\u2019s gross domestic growth may be slightly higher than the Washington-based lender\u2019s earlier 1.8 per cent forecast, as the non-oil sector is expanding faster than the rest of the economy.<\/p>\n
In 2018, Saudi Arabia\u2019s GDP growth rebounded to 2.2 per cent after contracting in 2017. Real oil GDP increased by 2.8 per cent while non-oil GDP growth rose 2.1 per cent, the IMF said after article IV consultations with the country this month.<\/p>\n
Real non-oil growth is expected to strengthen further to 2.9 percent in 2019, compared to 0.7 percent for the real oil economy in 2019 and 1.9 per cent for overall real GDP growth this year \u2013 assuming the kingdom continues to produce the level of oil under the current Opec agreement.<\/p>\n
\u201cIf Saudi Arabia increases oil production, then oil GDP growth would be higher, as would export and fiscal revenues,\u201d the IMF said last week.<\/p>\n
\u201cOver the medium-term, the [IMF] team expects a strengthening in non-oil growth to around 3 to 3.25 per cent as the ongoing reforms yield dividends and overall real GDP growth to settle around 2.5 per cent.\u201d<\/p>\n
–<\/p>\n
The National<\/p>\n
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