Riyadh – Ministry of Finance in Saudi Arabia said it has not yet implemented the selective tax on commodities such as soft drinks, energy drinks and tobacco.
Upcoming April is expected to witness the completion of this step.
Asharq Al-Awsat Newspaper was informed that Saudi Arabia will not apply the selective tax before announcing an implementation mechanism – this coincides with the fact that the Saudi market is currently considered one of the most consuming markets of selective commodities.
The ministry’s resolution comes in tandem with the decisions adopted by the Supreme Council of Gulf Cooperation Council leaders during its 36th session held in December 2015 and its 37th session held in December 2016.
The tax has not been implemented yet – but will be imposed after the ratification of the uniform agreement on selective tax and the issuance of the domestic rules of procedure, the ministry revealed.
“The target date of implementation is April 2017,” clarified the ministry of finance, following Saudi Customs affirming not receiving any orders to implement the selective tax on tobacco.
Gulf States are expected to generate revenues in excess of $25 billion per annum from the proposed value added tax (VAT) at the rate of 5 percent, according to an estimate by Ernst & Young (EY).
The adoption of value added tax by the six member GCC countries represents a major shift in tax policy that will impact all segments of the economy and lead to a fundamental change in the way businesses operate across around the region, added Ernst & Young.