What is Excise Tax?
Excise tax is a tax imposed by ZATCA on specific goods considered harmful to public health or the environment, such as tobacco, energy drinks, soft drinks, and sweetened beverages. It is charged at the point of import, production, or release for consumption.
How It Works
- Register with ZATCA as an excise taxpayer — importer, producer, or warehouse keeper.
- Apply the prescribed rate to the tax base for each category.
- File the excise tax return for each tax period through the ZATCA portal.
- Pay the tax by the statutory deadline.
- Retain commercial and customs records for at least five years.
Saudi Context
Current Saudi excise rates: 100% on tobacco, energy drinks, and electronic smoking devices and their liquids; 50% on soft drinks; and 50% on sweetened beverages with a separate definition. Excise tax is added to VAT and inflates final consumer prices.
Example
An importer brings in SAR 200,000 worth of energy drinks. Excise tax = 100% × 200,000 = SAR 200,000. VAT is then charged on the customs value plus excise: 15% × 400,000 = SAR 60,000.