Sugar tax in UAE, Saudi Arabia: Vimto warns of lower profit

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The excise tax on non-carbonated sweetened drinks in Saudi Arabia and the UAE will impact many companies. Vimto soft drinks maker Nichols feels that its full-year 2020 pretax profit could be materially below current expectations because of the excise tax.

The company stated that it might have to increase the retail prices of its drinks to compensate for the hike in excise tax which may affect the company performance in the year 2020.

As per reports, beginning January 1, 2020, 50 per cent tax will be levied on soft drinks with added sugar, in the form of a liquid, concentrate, powders, extracts or any product that may be converted into a drink.

It is likely that with the initiation of a sugar tax, it may impact on sugar usage in the country. The consumers may have to shell out more money for sugary drinks. The government aims to introduce it in a bid to reduce sugar consumption and to promote a better and healthy life.

Many countries, like the United Kingdom, Thailand, France, Ireland, Saudi Arabia, Portugal, and as well some US states, have introduced a tax on sugary drinks over the past few years.

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