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Excise tax is levied on goods typically harmful to public health or the environment at varying rates and proportions. These specific goods include soft drinks, energy drinks, sweetened beverages, electronic smoking devices or other similar goods and liquids used in such electronic devices or tools, and tobacco and its products. Are subject to selective tax, the producer, the importer, the holder of selective goods during suspension period or transitional phase for the implementation of the related law. The implementation of this indirect tax in the Kingdom of Saudi Arabia shall be in compliance with Unified Excise Tax Treaty for the GCC, published on 30 Sha’ban, corresponding to 26 May 2017.  Specific amendments were approved by the General Authority of Zakat and Tax, (Resolution No. 14-06 -22, dating 4/2/1444 AH for the following articles:

Article 17

Previous Article Title due tax assessment

1- The Authority shall calculate tax rate on selective goods in accordance with the regulations, provided that the following conditions are met:

a. The person importing excise goods failed to comply with submission conditions of an import declaration or submitted an incorrect import declaration.

b. Failed to comply with the conditions of filing excise tax return or filed an incorrect return.

c. Did not register for excise tax purposes.

2- As per this Article, an import declaration or an excise tax return is invalid, if it leads to an error in the due tax calculation

3- The Authority shall notify the taxpayer with the due tax amount in written notice.

4- The written notice shall include the bases used in the calculation of the due tax.

Title of the amended article Tax Assessment and Disclosure

1. In case the importer did not properly disclose the tax due, resulting in a decline in the amount of the tax, he shall notify the authority within 15 days from the date of his knowledge, using the form prepared for that purpose by the authority.
2. In case the applicant is aware of an error in his submitted tax return, resulting in a decline in the tax amount, he must correct that return within a period not exceeding 15 days from the date of his knowledge.
3. Any unpaid due tax on excise goods under suspension should be paid in accordance with the regulations within 15 days of the due date using the relevant form.
4. The Authority shall calculate the amount of tax due on excise goods in accordance with regulations in case the person liable for the payment of the tax did not properly disclose it.
5. For the purposes of this article, an import declaration or excise tax return, or any other form prepared by the authority in disclosing the tax due, is considered incorrect, if it leads to an incorrect excise tax calculation.
6. The Authority shall notify the person liable for the payment of the tax, with a written notice, of the amount of the due tax, provided that such notification includes the bases used in the tax calculation.

Article 18, Paragraph 4

previous paragraph

4- The due tax imposed under a tax assessment shall be paid to the Authority within a period of 15 days from the date of tax notification as per Article 17 of the Regulation.

Amended paragraph

4- The tax, in accordance with Paragraph (3) of Article Seventeen of the said regulation, shall be paid to the Authority within a period not exceeding 15 days from its due date.

Article 26, Paragraph 2

previous paragraph

2- The place where excise goods are not produced is eligible for a tax warehouse license, provided it meets the following conditions:

a) The average quantity of excise goods during a twelve-month period exceeds

1- 10 million liters of soft drinks, energy drinks or sweetened drinks.

2- billion cigarettes or other individual units of tobacco products.

3- 500 thousand kilograms of other tobacco products.

4- One million vaping devices and tools.

5- 250 thousand liters of electronic smoking devices and tools’ liquids.

b) The quantity of excise goods transferred from the Kingdom under tax suspension is not less than 70% of the excise goods acquired at this location. c) Obtaining a permit from the Board of Directors.

Amended paragraph

2- The place where excise goods are not produced is eligible for a tax warehouse license, provided it meets the following conditions:

a) The average quantity of excise goods acquired there, during a twelve-month period exceeds any of the following:

1-5 million liters of soft drinks, energy drinks or sweetened drinks.

2- 500 million cigarettes or other individual units of tobacco products.

3- 250 thousand kilograms of other tobacco products.

4- 500 thousand electronic smoking devices and other similar tools.

5- 125 thousand liters of liquids for electronic smoking devices and tools and other similar goods.

b) All conditions and requirements stipulated in Articles 29, 39, 31 and 32 of the said regulation, are to be fulfilled provided that the licensee or the license applicant provides the financial guarantee due to each tax warehouse, before the application is finally approved.

c) Fulfilling any other conditions specified by the Authority in the license application.

The experts of Andersen in Saudi Arabia advise to fully understand and fulfill the new amendments and regulations to avoid any tax difference calculation.