Ban on import of cigarettes without tax stamps comes into force

The General Authority of Zakat and Tax (GAZT) announced on Thursday that it would start imposing a ban on import of cigarette packs that do not bear valid and activated tax stamps to the Kingdom effective from Friday, Aug. 23. The decision will be enforced in cooperation with the General Customs Authority. The taxes fall under the category of selective taxes on products deemed harmful to public health.

This decision is based on the provisions of the Executive Regulations of the Selective Tax Law related to tax stamps within the framework of the Uniform Agreement on Selective Tax of the GCC States. A tax stamp is defined as a “distinctive mark” in the form of a physical label or symbol containing encrypted digital data, placed on selective commodity products and activated electronically. Producers and importers of selective goods have to follow this system before putting them up for consumption.

In May this year, GAZT called on importers of tobacco products in the Kingdom to apply for tax stamps made available through its website GAZT.GOV.SA. The authority began its first step in putting the stages for tax stamps into action by implementing the system on cigarettes imported into Saudi Arabia, effective from May 31. This will allow importers to apply for tax stamps on each cigarette pack imported from outside the Kingdom. The authority will prohibit the sale and circulation of cigarette packs without tax stamps effective from Nov. 18.

The application of the tax stamps helps achieve the imposition of controls on the collection of the selective commodity tax that is imported into Saudi Arabia and enhance the ability to verify the safety of the entry of selective goods within the Kingdom in a lawful manner so as to ensure that the Kingdom collects all taxes due on this type of goods. The application of tax stamps ensures that the standards of compliance set out in the WHO Convention on Tobacco Control are met.

It is worth mentioning that the application of tax stamps on tobacco products will be extended later to include other tobacco products including shisha, and then to the application of soft drinks and energy drinks subject to selective tax in the Kingdom. GAZT announced earlier that 100 percent tax would be levied on electronic cigarettes and products used in them, and a 50 percent tax on sugared drinks. Saudi Arabia, the Arab world’s largest economy, already had a 100 percent tax on cigarettes and tobacco products, a 100 percent tax on energy drinks and a 50 percent one on fizzy drinks.