Since 1 January 2026, two bottles of the same-looking flavoured drink can carry entirely different tax bills depending on a number most finance teams never used to track: grams of sugar per 100ml. Saudi Arabia’s move from a flat 50% excise rate on sweetened beverages to a four-tier, sugar-content-based structure means the classification decision now happens at the recipe level, not the product-category level — and getting it wrong on a large shipment is an expensive mistake to unwind.
This article walks through how the tiers are actually applied in practice: how to calculate the tax per tier, where the classification edge cases sit, and what documentation ZATCA expects if you’re claiming an exemption.
The Four Tiers, in Practice
The tier structure prices tax per litre, not as a percentage of value — a meaningful shift from the old flat 50% rate, which scaled with the product’s price. Under the tiered system, a premium and a budget drink with identical sugar content pay identical excise tax per litre, regardless of retail price.
| Tier | Sugar Content | Excise Tax |
|---|---|---|
| Tier 1 | Artificial sweeteners only, no added sugar | Zero |
| Tier 2 | Under 5g of sugar per 100ml | Zero |
| Tier 3 | 5g to 7.99g of sugar per 100ml | SAR 0.79 per litre |
| Tier 4 | 8g or more of sugar per 100ml | SAR 1.09 per litre |
Because the rate is per litre rather than per unit percentage of price, a producer’s first practical task is converting the tier rate into a per-bottle or per-can figure based on actual container size — not simply applying the headline SAR figure as if every product is sold in exactly one litre.
Worked Examples by Container Size
A carbonated drink with 10.5g of sugar per 100ml falls into Tier 4. On a 330ml can, the excise tax due is SAR 1.09 × 0.33 litres = SAR 0.36 per can. Across a shipment of 50,000 cans, that’s SAR 18,000 in excise tax before VAT is applied on top.
A reformulated version of the same drink, brought down to 6g of sugar per 100ml, falls into Tier 3 instead. On a 500ml bottle, the tax due is SAR 0.79 × 0.5 litres = SAR 0.40 per bottle. Reformulating from Tier 4 to Tier 3 does not always reduce the per-unit tax — container size and tier both drive the outcome, so the two need to be checked together, not assumed.
The Tier 3 example above is a useful warning: a smaller container at a higher tier can carry a similar or even higher per-unit tax than a larger container at a lower tier. Producers reformulating to reduce tax exposure need to model the actual container size alongside the sugar-content change, not the sugar reduction in isolation.
Where Classification Gets Difficult
Most products classify cleanly. A handful of categories sit close enough to the exemption boundaries that they need a documented, deliberate classification decision rather than an assumption:
- Flavoured milk drinks. The milk-based exemption requires at least 75% milk content. A flavoured milk drink with added sugar and only 60% milk content does not qualify for the milk exemption and instead falls to be assessed under the standard sugar-content tiers.
- Sports and protein drinks. These are frequently formulated with added sugar for taste and energy content. Unless the product independently qualifies under the plant-based milk alternative criteria, it is assessed the same way as any other sweetened beverage — sports marketing does not change the tax treatment.
- Flavoured sparkling water with a touch of sweetener. Genuinely unflavoured carbonated water is outside excise tax entirely, under the soft drinks definition. The moment a sweetener or flavouring is added, the product exits that carve-out and is assessed under the sweetened beverage tiers based on its actual sugar content.
- Concentrates and powders. The tiers apply to the product “as consumed,” meaning a concentrate’s classification should be based on the sugar content of the beverage once reconstituted according to the manufacturer’s instructions — not the concentrate’s undiluted sugar density.
Documenting an Exemption Claim
Claiming Tier 1, Tier 2, or one of the three category exemptions (natural juice, milk content, plant-based milk) shifts the burden onto the producer or importer to substantiate the claim if ZATCA reviews it. In practice, that means retaining:
- Laboratory analysis or the manufacturer’s certified nutritional composition showing actual sugar content per 100ml, dated and tied to the specific product batch or formulation
- For the milk exemption, documentation confirming the milk content percentage, not just a label claim
- For natural juice, evidence that no sweeteners were added at any point in the production process
- A record of any reformulation, since a Tier 4 product moved to Tier 2 through a sugar reduction should have the reformulation date documented — ZATCA can reasonably expect earlier shipments to reflect the pre-reformulation tier
A verbal or marketing-based claim of “low sugar” or “all-natural” is not documentation. If an audit finds a product classified at Tier 1 or Tier 2 without underlying composition evidence, ZATCA can reassess at the higher tier the product’s actual sugar content supports — with penalties and interest calculated back to the relevant filing periods.
Frequently Asked Questions
The tier rate is set per litre, not per unit. Multiply the applicable rate (SAR 0.79 or SAR 1.09 per litre) by the container’s volume in litres. A 330ml can at Tier 4, for example, carries SAR 1.09 x 0.33 = SAR 0.36 in excise tax.
It can, if container size isn’t modelled alongside the sugar reduction. A smaller container at Tier 3 can carry a similar or higher per-unit tax than a larger container at Tier 4, because the rate is per litre. Model both variables together, not sugar content alone.
Not automatically. Unless a product genuinely meets the natural juice, milk-content, or plant-based milk alternative criteria, sports and protein drinks with added sugar are assessed under the standard sugar-content tiers regardless of how they’re marketed.
Laboratory analysis or certified manufacturer nutritional composition showing actual sugar content per 100ml, tied to the specific product batch. For milk or natural juice exemptions, documented composition evidence — not a label claim — is required.
No. Unflavoured carbonated water sits outside excise tax under the soft drinks definition. Once any sweetener or flavouring is added, the product exits that carve-out and is assessed under the sweetened beverage sugar-content tiers.
Based on the sugar content of the beverage as reconstituted per the manufacturer’s instructions, not the concentrate’s undiluted sugar density — the tiers apply to the drink ‘as consumed.’
- The four sugar-content tiers (zero, zero, SAR 0.79/litre, SAR 1.09/litre) are priced per litre, so the per-unit tax depends on both sugar content and container size together.
- A smaller container at a higher tier can carry a similar or greater per-unit tax than a larger container at a lower tier — reformulation decisions need to model both variables.
- Flavoured milk drinks, sports drinks, flavoured sparkling water, and concentrates are the categories most likely to be misclassified — each needs a deliberate, documented decision.
- Exemption and low-tier claims require retained composition evidence — lab analysis or certified manufacturer data — not a marketing claim.
- A reformulation that moves a product to a lower tier should have its effective date documented, since ZATCA can reassess earlier shipments at the tier their actual composition supports.
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This article is based on the Saudi Press Agency’s official announcement of the sweetened beverages excise tax rate change effective 1 January 2026, together with ZATCA’s published excise tax rules. As noted in our excise tax overview, ZATCA’s own goods-list reference page had not visibly reflected the tiered structure as of the time of writing. It is provided for general information only and does not constitute tax or legal advice. Confirm current rates and classification directly with ZATCA before relying on this article for a live filing. dariba.co is an independent platform with no consulting relationships.