GCC to impose heavy tax on tobacco, soft drinks

The Gulf Cooperation Council (GCC) is set to impose heavy taxes on tobacco, soft drinks and energy drinks ranging from between 50-100 percent, a senior Emirati official said.

The Under-Secretary of the UAE Ministry of Finance Younis Haji Al Khoori told the local Khaleej newspaper that the new selective tax is different from the value added tax (VAT) of five per cent to be implemented on 1 January 2018.

Al Khoori said the GCC states agree on increasing selective taxes and the value-added tax, explaining that tax on soft drinks will increase by 50 percent while tax on energy drinks, tobacco and its derivatives will increase by 100 percent.

The Saudi finance ministry said on Wednesday that a 50 per cent tax on soft drinks will come into force in the second quarter of 2017 as part of the state budget plan for the fiscal year 2017.

The finance ministers of the Gulf Cooperation Council (GCC) nations are scheduled to meet in May to discuss common issues and ways to enhance economic cooperation.

The new austerity measures aim to compensate for losses in oil revenues.