KSA has announced the implementation of the Excise Tax Law effective June 11, 2017.
The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has announced the implementation of the Excise Tax Law effective - 11/06/2017, at 12:00 A.M, as per Royal Decree No. (M/86), dated 27/8/1438 H.
Some of the key points are listed below:
- Excise tax will be chargeable on the importation or production of excise goods released for consumption in the KSA after midnight tonight.
- The excise tax will, ordinarily, be chargeable by reference to the “tax base” of the goods concerned. The tax base is the higher of either the retail price of the goods or a list price which will be determined and published by the authorities.
- The definitions of excise goods are, broadly, soft carbonated drinks (50% rate), energy drinks (100% rate), and tobacco products (100% rate). Specific details pertaining to the distinction between those types of products will be published shortly. It would be reasonable to assume that the customs authorities will, and producers should, adopt a wide interpretation of what constitutes an excise good, and what type of excise good (i.e whether a soft drink is an energy drink).
- Excise tax registration is required for anyone intending to import, produce or hold (under a suspension arrangement) any excise goods in the KSA.
- All those holding excise goods valued in excess of 60k SAR (whether or not otherwise registered or registrable) are required to submit a one-off transitional return and pay excise due within 45 days of the implementation of the tax. This means many shops and other businesses will need to pay tax on stocks on hand.
- In addition to any transitional return, Excise tax registrants must submit returns reporting their total excise liabilities on a bi-monthly basis (i.e. one return every two calendar months). Returns must be submitted together with payment within 15 days of the end of the tax period.
- Importers of excise goods that are not entered into an approved warehousing arrangement will be required to pay excise tax upon importation to the Customs authorities.
All affected businesses should take immediate action now to assess the impact and register or file a return as appropriate.
The Excise Implementing Regulations are available on GAZTs website at the following link.
The Deloitte bilingual replication of the KSA Excise Tax Law document is available on the following link. The Deloitte bilingual replication of the Excise Tax Implementing Regulations is available on the “VAT in the GCC guide” mobile app.