In Saudi Arabia, electronic cigarettes will now be taxed. This is intended to counterbalance the drop in oil prices and the resultant deficit.
A similar approach was already established in 2017 as part of a royal effort, when Saudi Arabia decided to tax vaping products and energy drinks by 100%, and non-alcoholic beverages at 50%. The General Authority of Zakat made the decision on May 15. The new taxes started in earnest the Saturday after the announcement was made in an official government journal.
New taxes to target products considered dangerous to health
The price of oil has continually dropped in the past years, and the country needed to react quickly. Consequently, it decided to tax products that are considered dangerous to public health. Vaping products are part of this definition, even if there is no proof that e-cigarettes are dangerous. What’s more, e-cigarettes are considered one of the most effective nicotine substitutes for anyone hoping to quit smoking.
Saudi Arabia, the biggest oil exporter in the world, already implemented a 5% value-added tax (PPN) in January 2018. The goal was to increase non-oil related revenue to counterbalance the drop in oil prices. The most recent oil crisis, which began in mid-2014, has caused continual chaos in the country, and the Saudi Arabian government needed to find new ways to combat a growing budget deficit.