1. The following words and phrases - wherever they appear in the Law - shall have the meanings set forth opposite each of them unless the context requires otherwise:

• Council: The Cooperation Council for the Arab States of the Gulf.

• Member State: Any state enjoying full membership in the Council in accordance with its Basic Law.

• Ministerial Committee: The Financial and Economic Cooperation Committee of the Council States.

• Due Tax: The tax on selective goods that must be paid to the Authority.

• Tax Base: The value of selective goods on which the tax is calculated in accordance with paragraph (1) of Article Four of this Regulation; represented by the highest value of any of the following prices, excluding the due tax and value-added tax:

  A- The retail sale price determined in accordance with the provisions of this Regulation by the importer, producer, or any other person offering selective goods for consumption in the Kingdom.

  B- The reference retail sale price determined by the Authority for tax purposes.

  C- The standard price of selective goods, which is periodically determined among the tax authorities in the Council States in accordance with the provisions of the Agreement.

• Tax Seal: It means the distinctive mark stipulated in Article (18) of the Agreement, which is a sticker, symbol, or mark placed on specified selective goods, activated electronically, and its form and the information it contains are determined by the Authority.

• Authorized Supplier: The person licensed by the Authority to supply tax seals.

• Possession for Commercial Purposes: Possession of selective goods for the purpose of conducting commercial activities or any related activities, or possession of selective goods in quantities exceeding the limits specified by the Authority.

• Specified Selective Goods: Selective goods that are required to have tax seals placed on them for the purposes of this Regulation.

• Suspended Tax Status: The status in which the tax liability on selective goods is suspended.

• Person Obliged to Pay Tax: The person obligated under the provisions of the Law and Regulation to calculate the due tax on their account, declare it, and pay it to the Authority.

• Licensee: The person approved by the Authority to, during the course of their work, produce selective goods, or convert, possess, store, transport, or receive locally produced or imported selective goods in a tax warehouse.

• Selective Goods: Goods subject to tax in accordance with the provisions of the Law and Regulation.

• Importation of Selective Goods: The entry of selective goods into the Kingdom which are not subsequently placed under a suspended customs duty status, in addition to customs clearance and release of selective goods for import purposes in the Kingdom.

• Tax Warehouse: The specified place where the licensee is permitted to produce selective goods, or convert, store, or receive selective goods under suspended tax status.

• Total Damage: Occurs when selective goods become absolutely unfit for use.

2. Except as provided in paragraph (1) of this Article, the words and phrases contained in the Regulation shall have the meanings assigned to them in the Agreement and the Law.

1- Selective tax is imposed on the following goods:

• A) Tobacco products.

  B) Energy drinks.

  C) Sweetened beverages, classified according to the following categories:

  - Category One: Sugar-free and containing only artificial sweeteners.

  - Category Two: Low sugar (containing total sugar less than 5 grams per 100 milliliters).

  - Category Three: Medium sugar (containing total sugar from 5 to 7.99 grams per 100 milliliters).

  - Category Four: High sugar (containing total sugar 8 grams or more per 100 milliliters).

  D) Electronic smoking devices and tools and their equivalents.

  E) Liquids used in electronic smoking devices and tools and their equivalents.

2- The Authority's Governor may issue the necessary decisions regarding defining the scope of selective goods mentioned in paragraph (1) of this article and defining them in accordance with the decisions issued by the Ministerial Committee.

1- A tax rate of 100% is applied to tobacco products.

2- A tax rate of 100% is applied to energy drinks.

3- A tax rate is applied to sweetened beverages, as follows:

• - First bracket: 0 Saudi Riyals per liter.

• - Second bracket: 0 Saudi Riyals per liter.

• - Bracket Three: 0.79 Saudi Riyals per liter.

• - Bracket Four: 1.09 Saudi Riyals per liter.

4- A tax rate of 100% is applied to electronic smoking devices and similar products.

5- A tax rate of 100% is applied to liquids used in electronic smoking devices and similar products.

1- The tax due on excise goods listed in paragraphs (A), (B), (D), and (E) of Article Two of this Regulation shall be calculated by applying the tax rates for each excise good to its tax base.

2- The tax due on excise goods subject to tax listed in paragraph (C) of Article Two of this Regulation shall be calculated by applying the corresponding tax rate for each bracket listed in paragraph (3) of Article Three of this Regulation to the number of liters offered for consumption of the goods included in that bracket.

3- In the event that the excise goods listed in paragraph (2) of this Article are offered for consumption in the form of concentrates, powders, gels, or extracts, the tax due shall be calculated based on the total sugar content in the final diluted beverage, by applying the corresponding tax rate for each bracket listed in paragraph (3) of Article Three of this Regulation to the number of liters of the final ready-to-drink beverage prepared from those concentrates, powders, gels, or extracts according to the dilution rate instructions indicated on the goods offered for consumption.

4- The Authority Governor may determine the methodology for calculating the dilution rate for the purpose of calculating the tax due, in the event that no dilution instructions are available on the goods pursuant to paragraph (3) of this Article, or if their accuracy is proven to be incorrect.

5- The tax due shall be calculated based on the tax rate applicable at the time the excise goods are offered for consumption.

6- In the event of multiple tax rates applicable to the excise goods, the highest tax rate shall apply.

Selective goods are deemed to be released for consumption and thus subject to tax in the following cases:

• 1. Importing selective goods unless they are in a suspended tax status.

• 2. Producing selective goods outside of a suspended tax status.

• 3. Release of selective goods from any suspended tax status.

• 4. Possession of selective goods outside of any suspended tax status for which the due tax has not been fully paid.

• 5. Total destruction of selective goods or their loss in a suspended tax status, unless the licensee proves that their loss or destruction was due to reasons beyond their control, subject to the following conditions and procedures:

  • أ) The licensee must fill out the form prepared by the authority for this purpose, which must include at least the following information:

    • 1. The tax warehouse license number of the licensee.

    • 2. Information related to the total destruction or final loss of the selective goods.

    • 3. Evidence confirming that the total destruction or final loss of the selective goods was beyond the control of the licensee.

  • ب) The licensee must submit the form to the authority within a period not exceeding 7 days from the date of total destruction or final loss.

  • ج) The authority shall notify the licensee of its decision within a period not exceeding 14 days from the date of receiving the form; otherwise, the total destruction or loss of the selective goods shall be considered to have occurred due to reasons beyond the control of the licensee.

  • د) The relevant department in the authority may extend the period mentioned in paragraph (ج) above for one additional similar period, provided that the extension decision is issued before the end of the first period and that the licensee is notified of this.

  • هـ) If the licensee fails to submit the form within the period mentioned in paragraph (ب) above, or if the authority decides that the information provided is insufficient or incorrect, the selective goods shall be considered to have been released for consumption from the time of total destruction or final loss.

The excise tax applies in the following two cases:

• 1. The production of excise goods or their transformation, possession, storage, or receipt of locally produced excise goods by the licensee.

• 2. The transfer of excise goods in any of the following cases:

  • A) From a tax warehouse in the Kingdom to another tax warehouse in the Kingdom.

  • B) From a tax warehouse in the Kingdom to a tax warehouse in any member state.

  • C) From a tax warehouse in any member state to a tax warehouse in the Kingdom.

  • D) From a tax warehouse in the Kingdom or in any member state to outside the territory of the Council for export or re-export in accordance with the provisions of the Unified Customs Law.

  • E) Upon importation to a tax warehouse in the Kingdom or any member state.