Saudi Arabia to impose 100 percent value added tax on tobacco
Saudi Arabia has one of the world’s highest rates of smokers as 14 percent of its teenagers and seven percent of its women smoke
Saudi Arabia’s decision to impose 100 percent value added tax (VAT) on tobacco and its products will bring down the number of smokers in the country, said Dr. Mohammed Yamani, chairman of the board of directors of Naqa, an NGO that helps smokers kick the habit.
“The move is a positive and important step toward combating the unhealthy habit,” he told Okaz/Saudi Gazette.
Saudi Arabia has one of the world’s highest rates of smokers as 14 percent of its teenagers and seven percent of its women smoke.
“Smoking habit among young Saudis aged 18 and below has increased with their rate reaching 13 to 14 percent. The figure is close to the study conducted by the World Health Organization,” Yamani said.
He said the VAT on tobacco and its products would be imposed in the second quarter of 2017 as part of the government’s efforts to achieve fiscal balance.
“Cigarette prices in the Kingdom and other Gulf states are still low compared to other countries,” he pointed out.
Yamani, who has been working to combat smoking during the past several years, emphasized the need to bring price of a cigarette packet to SR35-SR40. “VAT will be imposed on import cost. So the price of a cigarette packet will not reach double of the present price,” he explained.
He wanted the Kingdom to increase taxes on cigarettes to bring prices to international level. He said low prices have contributed to increasing the number of smokers in the Gulf region, especially among teenagers and people having low income.
“The increase in cigarette price will not prevent people from smoking but bring down the number of smokers,” Yamani said citing studies conducted in advanced countries.
He said the executive bylaw for preventing smoking in public places will be published shortly.
“The Cabinet has already passed the law and the health minister has told us two weeks ago that the law will be implemented within a few days,” he added.
The Kingdom has widened the scope of public places where smoking is not allowed and it includes prayer places, schools and restaurants. It’s the longest article of the law.
He said VAT would be imposed on harmful materials beginning from the second quarter of next year. The Saudi finance minister has already signed a resolution taken by the GCC Supreme Council to impose 50 percent tax on beverages and 100 percent tax on tobacco and its products.
This article was first published on the Saudi Gazette on Dec. 29, 2016.