Soda makers in Saudi Arabia consider reducing can size on new tax

Soft drink and energy drink companies in Saudi Arabia are studying reducing can sizes to offset an expected drop in sales once the Kingdom’s selective tax comes into effect, Al-Eqtisadiah newspaper reported on Wednesday.

Under the new system, manufacturers and suppliers will be allowed to supply smaller cans, after submitting their tax statements and completing data registration.

Saudi Arabia’s cabinet agreed in February to implement the unified selective tax agreement that was previously approved by the six member states of the Gulf Cooperation Council (GCC).

A tax of 100 percent will be levied on tobacco and byproducts, as well as energy beverages, while a 50 percent tax will be applied to soft drinks.

The Saudi General Authority of Zakat and Tax (GAZT) and Ministry of Commerce & Investment will issue regulations for the commodities to which the new tax applies tomorrow or next Sunday.

The Kingdom will also impose the value-added tax (VAT) at 5 percent on January 1, 2018.