RIYADH: Saudi Arabia will impose a special tax on tobacco and sugary drinks on June 10, as part of a series of steps towards closing a budget deficit caused by low oil prices. Khalid Khurais, director of the selective tax unit of the General Authority of Zakat and Tax, told Al Arabiya television on Sunday that rules covering the tax were published in the official gazette last week and would take effect after 15 days. Officials have said they expect to raise between 8 billion and 10 billion riyals ($2.1 billion to $2.7 billion) annually from the tax, which will comprise a 50 percent levy on soft drinks and 100 percent on tobacco and energy drinks.
The tax marks a big change in policy for Riyadh, which has traditionally kept taxation minimal but now plans a series of levies and fees by 2020 to close a budget gap that totalled 297 billion riyals last year. Next January it plans to impose a 5 percent value-added tax, a much bigger revenue-generating step. The other countries in the six-nation Gulf Cooperation Council have also agreed to impose the tax on tobacco and sugary drinks, and are expected to do so in coming months.
