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MPs are set to discuss major amendments to the Selective Tax Law on sweetened beverages, following a Royal Decree that formally referred the draft legislation to Parliament.
The draft law, as outlined by the Cabinet, introduces changes to Law No (40) of 2017 concerning Selective Tax, marking a significant step towards increasing revenues from sweetened beverages while updating the administrative framework of the tax system.
The proposed amendments aim to encourage healthier lifestyle choices across the country.
The draft was forwarded to Parliament by His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince and Prime Minister, and is expected to be voted for referral to Parliament’s financial and economic affairs committee during the weekly session today.
At the heart of the amendments is a new tax structure for sweetened beverages, replacing a flat-rate approach with graduated sugar-based bands, in line with the GCC Unified Excise Tax Agreement.
Under the proposed changes:
– Sugar-free beverages using artificial sweeteners will be taxed at zero dinars per litre.
– Drinks with less than 5gm of sugar per 100ml will also attract no tax
– Beverages containing 5-7.99gm of sugar per 100ml will be taxed at BD0.079 per litre.
– Drinks with 8gm or more of sugar per 100ml will face the highest rate of BD0.109 per litre.
– Taxing other selective commodities that may be later added by the minister following Cabinet approval, which could be included in the GCC agreement.
– Taxes on tobacco and energy drinks remain unchanged at 100pc.
The Legislation and Legal Opinion Commission said the changes are designed to promote healthier consumer choices, protect public health and ensure greater tax fairness.
The draft law also introduces institutional reforms, formally transferring responsibility for implementing and administering selective tax from the Finance and National Economy Ministry to the National Bureau for Revenue (NBR). All references to the ‘ministry’ in the existing law will be replaced by the ‘bureau’, while powers previously assigned to the ‘minister’ will be transferred to the chief executive of the bureau.
Beverages that are tax-free could be included in sin tax if they are not under the exempted category intended for commercial purposes and the tax due exceeds BD500.
Businesses will be required to submit a tax declaration and settle payments within 30 days of the law’s implementation.
In addition, entities engaged in excise-related activities will be allowed to register with the bureau in advance, easing the transition to the updated system.
The legislation follows Cabinet decision last week approving the proposal to increase selective revenues on soft drinks and tasking the Finance and National Economy Minister with completing the necessary legal procedures.
The Cabinet said the amendments complete the legislative framework governing excise tax while supporting Bahrain’s fiscal balance programme.
If approved, the changes are expected to reshape Bahrain’s selective tax system, balancing revenue generation, public health priorities and regulatory clarity.
mohammed@gdnmedia.bh
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