Time: 11 February, 2020
Along with the other member states of the Gulf Cooperation Council, Saudi Arabia is gradually implementing the taxation of goods deemed to have negative effects on public health and the environment.
For example, tobacco products, electronic vaping equipment and liquids, and energy drinks attract tax at a rate of 100 percent — doubling the price to the consumer. Tax on soft drinks and sweetened drinks is payable at a rate of 50 percent.
The tax is payable by importers or producers, based on the retail value of the goods, excluding Value Added Tax. Producers are required to submit a tax declaration every two months, six times in each fiscal year, and pay the estimated tax due within 15 days of submitting the declaration. Importers pay the tax for each customs declaration at the Customs Authority. At the end of each two-month period the General Authority of Zakat and Tax reviews the figures, and calculates the difference, if any, between the estimates and the reality.
If taxable goods are illegally imported or exported, or in the event of their illegal production, transfer, storage or possession, an offender may be fined up to three times the value of the tax due. Fines also apply to providing false documents and papers related to taxable goods, or conducting any related activities without a license. The fines apply in the event of any attempt to commit such an offense, even if it fails.
Anyone obstructing or preventing General Authority of Zakat and Tax staff from doing their job, or failing toinform the authority of any relevant changes, may be fined up to SR50,000 ($13,331).
Tax declarations must also be submitted on time, and failure to do so attracts a fine of 5 percent of the value of the taxable goods for a delay of up to 30 days; 10 percent for between 30 and 60 days; 15 percent for 60-90 days; 20 percent for 90-120 days; and 25 percent for more than 120 days.
There is also a fine of SR50,000 or the value of the tax due, whichever is higher, if the taxpayer fails to adhere to the criteria for maintaining the safety of taxable goods, or fails to keep proper books and records.
If any of these offenses are repeated within three years, the original fine may be doubled or the operator’s license may be suspended for up to six months.
No one likes paying tax, and no consumer likes to see the price of their purchases doubled — but taxes such as these serve a purpose in deterring unhealthy activity, and in defraying some of the expense incurred by society in treating illnesses that may be caused by the unregulated use of these goods.
Dimah Talal Alsharif is a Saudi legal counsel and a member of the International Association of Lawyers. Twitter: @dimah_alsharif