Taxing Sugar, Promoting Health: Saudi Arabia’s New Beverage Excise System

Saudi Arabia is introducing a new way of taxing sweetened beverages in 2026, and this time the focus is firmly on how much sugar is inside the drink. Instead of the previous one-size-fits-all approach, the excise tax will now be calculated based on the sugar content per 100 millilitres of ready-to-drink beverages.

Previously, all sweetened drinks were subject to a fixed excise tax of 50 percent of the retail price, regardless of whether they were lightly sweetened or loaded with sugar. The updated system replaces that flat rate with a tiered structure, where beverages are taxed according to their sugar levels. The higher the sugar content, the higher the tax.

Under the new system, beverages will be classified into the following tiers:

• Tier 1 (Zero tax): Drinks sweetened exclusively with artificial sweeteners and containing no added sugar.
• Tier 2(Zero tax): Low-sugar beverages with less than five grams of sugar per 100 ml.
• Tier 3 (SAR 0.79 per litre): Medium-sugar drinks containing between five and 7.99 grams of sugar per 100 ml.Tier 4 (SAR 1.09 per litre): High-sugar beverages with eight grams of sugar or more per 100 ml, which fall under the highest tax rate.

The authority has made it clear that this move is not just about taxation. The main objective is to push manufacturers and importers to reduce sugar levels, reformulate their products, and offer healthier choices to consumers. At the same time, the policy aims to guide consumption habits toward lower-sugar alternatives.

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