27 percent rise in prices of some cigarettes, implementation to begin in December


By Abdulrahman Al-Misbahi

Okaz/Saudi Gazette

JEDDAH — The General Authority of Zakat and Tax (GAZT) has recently specified the minimum price for all brands of “tobacco” products, with the purpose of specifying the selective tax, Okaz has learned from reliable sources.

GAZT has laid down conditions that the minimum price per pack of 20 cigarettes should not exceed SR8. Meanwhile, the minimum price of tobacco products ready for use, shisha (hubble-bubble) and other similar products will be SR25 per 250 grams (equivalent to SR100 per kilogram).

The decision will not affect average and expensive tobacco products, as it will be applicable to low cost products.

A tour of shops selling cigarettes by Okaz/Saudi Gazette showed that there are cigarette brands being sold for SR11 per pack to the final consumer. This is when the price per pack before imposition of the selective tax and value added tax (VAT) was SR5.25.

Subsequently, it will be sold at a minimum price of SR14, with a 27 percent hike, as a SR8 tax will be imposed on the basic price per pack, which is SR5.25. Then the value added tax (VAT) will be added.

The Authority has asserted that it will implement a methodology of proportionality when calculating the minimum price for all tobacco products. However, there will be no lower limit for cigars.

GAZT has disclosed that implementation would begin in December 2019. The decision has been taken after reviewing the minutes of the 108th meeting of the GCC Financial and Economic Cooperation Committee, held last Safar in Kuwait.

At the beginning of implementation of the selective tax, the Authority had confirmed that a specific percentage would be imposed as tax on select commodities. In general, these are products deemed harmful to public health, and include chemical products.

Specifically, these include tobacco products, on which a 100 percent tax is being imposed on the gross (total?) retail price of cigarettes and tobacco products as well as on energy drinks, and a 50 percent tax on soft drinks.

This gross retail price is the final selling price for the select commodity, the way it has been specified, announced or mentioned on the commodity by the importer, manufacturer or the person supposed to pay the tax, or it is the standard retail price for select commodities.

Meanwhile, recently, a 100 percent tax was imposed on electronic shisha (electronic hubble-bubble) and its accessories and 50 percent on sweetened drinks.