All About Excise & Customs Tax in KSA

The Kingdom of Saudi Arabia (KSA) employs a multifaceted tax system that includes excise and customs taxes. These taxes play a crucial role in generating revenue for the government and shaping economic policies. Understanding these taxes is important for businesses in KSA to ensure compliance and optimal business practices.

This article explains all about Excise and Customs Taxes in KSA, including basics, registration requirements, and penalties for non-compliance.

Excise tax in KSA

The authority introduced the Excise Tax in 2017. This tax applies to specific goods, such as non-essential or deemed harmful. More than generating additional revenue, this tax aims to discourage the consumption of the goods below:

• Tobacco products - 100%
• Soft drinks - 50%
• Energy drinks - 100%
• Electronic smoking devices and related liquids - 100%

Customs tax in KSA

Customs tax, also called import duty, is levied on goods imported into KSA. The tax rate varies depending on the type of goods. The maximum customs rate in KSA is 40% for food and agricultural products when it exceeds self-sufficiency. However, a few essential items, such as rice and coffee, are exempt from Customs tax.

Registration under Excise and Customs tax laws

Registration under Excise tax:

Excise tax registration is mandatory for the following:

• Manufacturing excisable goods within KSA
• Importing excisable goods into KSA
• Storing excisable goods in a KSA tax warehouse
• Releasing excisable goods from a tax warehouse for consumption within KSA

Documents required for Excise registration:

• Commercial Registration (CR) Number
• Bank account details
• Details on excisable goods such as types, quantities, etc
• Other information, as requested by ZATCA

Registration under Customs tax:

Customs tax registration is mandatory for the following:

• Importing any goods into KSA, except for exempt items
• Customs clearance agents processing import declarations

Documents required for Customs registration:

• Commercial Registration (CR) Number
• Import declaration form with detailed goods information
• Supporting documents such as invoices, bills of lading, etc.
• Power of Attorney when using a customs clearance agent
• Payment guarantee, if required by ZATCA

Payment of Excise and Customs taxes

Taxpayers must file tax returns and pay dues electronically through the ZATCA portal. Payment deadlines vary depending on the tax type and business activity. Failing to comply can result in penalties and legal repercussions.

Penalties under Excise and Customs taxes in KSA

Non-compliance with Excise and Customs tax regulations can lead to hefty penalties, including fines, penalties, and tax arrears. Understanding and adhering to all tax laws is crucial to avoid such consequences.