Excise Tax Advisory Services In Saudi Arabia

EXCISE TAX ADVISORY
IN SAUDI ARABIA
& THE GCC

EXPERT CONSULTATION

EXCISE TAX
ADVISORY
SERVICES IN
SAUDI ARABIA

Our Excise Tax advisory service in Saudi Arabia is part of our tax consultancy services in Saudi Arabia.

Excise tax is an indirect tax set on specific goods; it is imposed within government policies rather than being an international tax imposed across countries. It is primarily considered as a business tax; a tax paid by the businesses; producers, importers, or an intermediary; and not by the consumer although it usually induces an indirect increase in price for consumers. It can be set and paid as a fixed percentage rate assessed on the value of certain goods referred to as “ad valorem” or as a specific fixed amount. 

Excise tax is typically imposed in the country where and at the time when the excise goods are consumed; applied on the retail price affecting the price of the excisable goods for final consumers; thus, referred to as a consumption tax.

WHO IS EXEMPT FROM PAYING EXCISE TAX?

  • Diplomatic and consular bodies, international organisations, and heads and members of diplomatic and consular corporations
  • Excise goods brought in by travellers entering the country provided that these goods are of non-commercial use, and they are within the allowance specified in the Customs Law
  • Excise goods sold in departures Duty-free shops and onboard consumption

 

TYPES OF EXCISE GOODS IN SAUDI ARABIA

  • Tobacco related products
  • Soft drinks
  • Energy drinks
  • Sweetened drinks
  • Electronic devices and tools related to smoking, vaping and similar activities
  • Liquid consumed in electronic devices used in smoking, vaping and similar activities

 

WHAT IS THE EXCISE TAX RATE IN KSA?

Excise Tax was introduced in KSA on 11 June 2017, the implementation and administration of Excise Tax is under the authority of Zakat, Tax, and Customs Authority (“ZATCA”) in KSA. For some excise goods, ZATCA specifies the minimum value to be applied. 

The excise tax is set on an ad valorem basis as shown in the following table:

Category of Excise GoodExcise Tax Rate
Tobacco Products100%
Soft Drinks50%
Energy Drinks100%
Sweetened Drinks50%
E-Cigarettes100%
Liquids of e-cigarettes100%

The excise tax rate is levied on the value of the excise good which is known as the Tax base. The Tax base is determined by comparing the Retail Sale Price of the good at the time of sale to the consumer and the Standard Price (minimum price) of the good as agreed and set periodically by the GCC Tax Authorities. The Tax base will refer to the price of higher value.

 

DISCLOSURE OF EXCISE TAX AND PAYMENT

An excise tax payment is submitted online along with providing the following information: the Category of the Excise good, description and brand, unit of measure, quantity of goods, and the Retail Sales Price per unit of measure. SADAD will provide the amount of Excise Tax due, which need to be paid within 45 days from the date of which the Excise Tax has become due.

 

VIOLATION OF DISCLOSURE OF EXCISE TAX

Penalties are imposed for failure to comply with ZATCA Excise Tax regulations, including the following:

ViolationPenalty
Failure to submit information requested by the AuthoritySAR 1,000 for each business day, and shall not exceed SAR 50,000
Preventing in any form the Authority employees from performing their dutiesSAR 50,000
Failure to file tax returnsRange from 5% to 25% of the unpaid tax amount
Carrying out the activity of production, importing or possession of excise goods without registrationA fine equal to the value of the tax due on the excise goods; and in case the violation is repeated the maximum penalty will be three-times the value of the excise goods
Breach of duty to safeguard the excise goodsSAR 50,000 or a penalty equal to the higher of the amount of the tax due on such excise goods
Failure to maintain commercial and electronic records in compliance with the law and regulationsSAR 50,000

EXCISE TAX IN QATAR

  • Tobacco and derivatives
  • Carbonated Drinks
  • Energy Drinks
  • Special Goods; that are consumed under specific conditions and authorisations.

On 1 January 2019, the Qatar Excise Tax Law came into effect based on the Common Excise Tax Agreement of the States of the Gulf Cooperation Council. The implementation and administration of Excise Tax is under the supervision of the General Tax Authority (“GTA”) in Qatar.

Category of Excise GoodExcise Tax Rate
Tobacco and related products100%
Carbonated Drinks50%
Energy Drinks100%
Special Goods100%

Excise tax is applicable on businesses engaged in the following activities:

  • Import of excise goods 
  • Production of excise goods 
  • Operation of a tax warehouse used for produced or stored goods liable to excise tax.

The tax warehouse license is valid for a year and will require renewal on yearly basis.

Filing and payment for excise tax return is completed electronically; businesses applicable to excise tax required to submit an excise tax registration application through Dhareeba tax-portal.

Businesses need not to declare the amount of excise tax on the invoice but need to submit the price of the good including excise tax, quantity and description of the goods must be included.

The taxable person is required to file for excise tax return within 15 days following the end of each tax period which is the calendar year quarter.

The taxable person is required to maintain excise tax records, physical or electronic, for a period of at least five years following the end of the corresponding tax period to verify the excise tax calculation and payment accuracy.

Refund on excise goods is permissible in the following cases:

  • Export or re-export of excise goods that have been offered for consumption in Qatar
  • Excise goods already released for consumption in the country to be used in the production of other excise goods that are subject to excise tax
  • Excise goods that were released for consumption in the country and moved to another GCC country implementing excise tax

EXCISE TAX IN OMAN

  • Tobacco and derivatives
  • Carbonated Drinks
  • Energy Drinks
  • Sweetened Drinks
  • Pork products
  • Alcohol

In June 2019, the Oman Tax Authority (“OTA”) introduced the Executive Regulations regarding Excise Tax, its registration, compliance, and exemption of excise tax.

Category of Excise GoodExcise Tax Rate
Tobacco related products100%
Carbonated Drinks50%
Energy Drinks100%
Sweetened Drinks50%
Pork products100%
Alcohol100%

Businesses engaged in the following activities are required to obtain excise registration:

  • Imports excise goods into the country
  • Production of excise goods released for consumption in the country
  • Storage of excise goods in the country

The taxable person is required to file for excise tax return within 30 days following the end of each tax period, and to maintain excise tax records for a period of at least five years following the end of the tax period.

ViolationPenalty
Failure to file tax returnsRange from OMR500 – OMR5,000
Non-compliance with the rules and regulationsRange from OMR500 – OMR5,000
Failure to submit information requested by the AuthorityRange from OMR500 – OMR5,000
Obtaining refund of tax based on incorrect information or documents.Range from OMR 1000 – OMR10,000

EXCISE TAX IN BAHRAIN

  1. Tobacco and derivatives
  2. Carbonated Drinks
  3. Energy Drinks

In 2017, Bahrain signed the Common Excise Tax Agreement of the States of the Gulf Cooperation Council. The implementation and administration of Excise Tax is under the authority of the National Bureau for Revenue (“NBR”).

ViolationPenalty
Failure to file tax returnsRange from 5%-25% of the excise tax amount
Refrain from paying the tax due during the period specified by the regulation5% of the unpaid tax value for each month or part of it for which the tax has not been paid
Failure to submit information requested by the AuthorityBHD 5,000
Preventing in any form the Authority employees from performing their dutiesBHD 5,000
Non-compliance with the rules and regulationsBHD 5,000

Excise tax is applicable on businesses engaged in the following activities:

  • Import of excise goods 
  • Production of excise goods 
  • Storage of excise goods 
  • Release and transfer of excise goods 

It is mandatory for all importers and producers of any excise good to register for excise with the NBR to be allowed to engage in any excise good related commercial activity by submitting the declaration form.

Refund on excise goods is permissible in the following cases:

  • Excise goods that have been offered for consumption in the country in case of export or re-export for business purposes outside the territory of the the States of the Gulf Cooperation Council 
  • Excise goods used in the production of other excise goods that are subject to excise tax.
  • Excise goods that were previously offered for consumption and were subject to excise duty in the country and were later transferred or moved to another GCC country.
ViolationPenalty
Failure to file tax returnsRange from 5%-25% of the excise tax amount
Refrain from paying the tax due during the period specified by the regulation5% of the unpaid tax value for each month or part of it for which the tax has not been paid
Failure to submit information requested by the AuthorityBHD 5,000
Preventing in any form the Authority employees from performing their dutiesBHD 5,000
Non-compliance with the rules and regulationsBHD 5,000

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