What are selective goods tax?
Selective goods tax is an indirect tax imposed on certain types of goods that harm public health or the environment. In Saudi Arabia, the selective goods tax was implemented on June 11, 2017, and is supervised by the Zakat, Tax and Customs Authority (ZATCA). The aim of this tax is to reduce the consumption of harmful products and generate additional revenue for the state to support public services.
What goods are subject to the tax?
The following three main types of goods are subject to selective goods tax in Saudi Arabia at varying rates:
- Tobacco and its products – at a rate of 100% (such as cigarettes, moassel, electronic cigarettes)
- Energy drinks – at a rate of 100%
- Carbonated drinks – at a rate of 50%
Illustrative example: If the price of a pack of cigarettes is 20 riyals, a selective tax of 20 riyals is added, making the final price 40 riyals before value-added tax.
Who is responsible for paying the tax?
The primary responsibility lies with:
- Local manufacturers – when producing selective goods within Saudi Arabia
- Importers – when importing these goods from abroad
The final consumer bears the actual cost, as the tax is added to the product price.
How to register for selective goods tax?
Manufacturers and importers of selective goods must register with the Zakat, Tax and Customs Authority upon commencing operations. The registration process is simple:
- Visit the Zakat, Tax and Customs Authority portal (zatca.gov.sa)
- Log in using the unified national access account (Absher)
- Select “Register for Selective Goods Tax” from the services menu
- Fill in the establishment and goods data (produced or imported)
- Submit the application and wait for approval
Failure to register or submit on time may result in financial penalties of up to 50% of the tax due.