Category: Taxation

  • Consumer Group Supports Indonesian Vape Tax

    Consumer Group Supports Indonesian Vape Tax

    Image: Deacon docs

    The Indonesian Consumers Foundation (YLKI) expressed support for a recently implemented tax on e-cigarettes, reports Tempo.

    The new tax took effect Jan. 1 and aims, in part, to discourage e-cigarette use. Vaping prevalence in Indonesia increased from 0.3 percent in 2011 to 3 percent in 2021, according to the Global Adult Tobacco Survey. The prevalence of cigarette smoking among adolescents aged 13-15 years increased by 19.2 percent over the same period.

    Previously, the Indonesian National Vape Association (Pavenas) asked the Finance Ministry to postpone the implementation of the tax on e-cigarettes. Secretary General of the Indonesian Personal Vaporizer Association (APVI), Garindra Kartasasmita, said that the combination of the tax and the excise tax hike would be a heavy blow to entrepreneurs, consumers and industry players.

    “This needs to take into consideration that the e-cigarette industry is a relatively new industry, and most of the industry players are from communities and MSMEs [Micro, Small & Medium Enterprises],” Garindra said in a statement published ahead of the tax.

     YLKI chairman Tulus Abadi rejected industry assertions that  vaping can help smokers give up of conventional cigarettes. “On the contrary, people will get double health burden due to the use of electronic cigarettes,” he said.

  • New UK Vaping Tax to be Unveiled in March Budget

    New UK Vaping Tax to be Unveiled in March Budget

    Credit: Lexicon Images

    A new tax will hit vapers in the United Kingdom despite warnings it will punish people who have switched to e-cigarettes after quitting smoking.

    The plans for the levy, which will likely increase the cost of vaping liquid by at least a quarter, will be unveiled in the Budget in March.

    A government source told The Mirror it was now almost inevitable that a tax on vaping will be introduced as part of the Spring Budget, which Chancellor Jeremy Hunt will announce on March 6.

    Ministers are looking to copy European countries such as Germany and Italy that already have levies on vapes.

    A 10ml bottle of e-liquid, which a typical vaper would get through in a week, costs around £4 at present. In Germany, a £1.40 vape tax is slapped on 10ml bottles, with plans to double this to £2.80 in 2026.

    Italy, which in 2014 became the first country to tax e-cigarette fluid, charges a £1.10 levy on 10ml bottles.

  • Michigan Governor ‘Open’ to Taxing Vape as Tobacco

    Michigan Governor ‘Open’ to Taxing Vape as Tobacco

    Credit: Vepar5

    The governor of Michigan says she is “open” to the idea of expanding the state’s combustible tobacco taxation policy to include vaping products.

    “I’m not leading with that… but if it’s something the legislature wanted to send to my desk, I’d have a conversation with them about it,” she said in a recent interview. “I’m open to it.”

    She has also said she seeks to enact a flavor ban on tobacco products and would sign a bill if passed. In November, S.B. 649 was introduced in the Michigan Senate. 

    The bill calls for the ban of the sales of flavored vaping and other tobacco products, defined as any product that has or is marketed as having a characterizing flavor other than tobacco.

    The bill would ban the sale of products packaged in ways that “indicate, explicitly or implicitly, that the nicotine or tobacco product has characterizing flavor.”

    That bill would not exempt flavored cigars, though it does carve out an exemption for flavored hookah tobacco intended for on-site consumption.

  • Ireland Halts Vaping Tax Over Cessation Concerns

    Ireland Halts Vaping Tax Over Cessation Concerns

    Credit: Schankz

    Ireland’s Finance Minister Michael McGrath postponed a vaping tax over concerns it would discourage smokers from quitting with e-cigarettes.

    Officials from the Department of Finance stated the need to strike a balance between discouraging young people from vaping and supporting existing smokers who switch to e-cigarettes to quit. Health officials recommended e-cigarettes be taxed differently based on their comparative harm versus traditional cigarettes,” according to media reports.

    McGrath has said introducing a new tax on vapes will be “challenging” to implement. The country’s government intends to apply the levy on e-cigarettes as part of a public health response to vaping. “A domestic tax will require significant IT, administrative, control, and compliance costs,” McGrath said.

    “We welcome the decision of the Minister of Finance and ask the Irish Government to keep a tax differential between electronic and traditional cigarettes in the future large enough to incentivize smokers to switch,” said Michael Landl, director of the World Vapers’ Alliance. “The risk profile of vaping products is much lower than that of combustion cigarettes and they should be taxed as such. If the tax had been approved, it would have pushed tens of thousands of vapers back to smoking.”

    Research has shown that increasing vaping taxes can lead to higher smoking, particularly among young adults. The Department of Finance submission also expressed concerns over vapers switching to the black market if the tax was enacted.

    Implementation of the tax was postponed with no new date in sight, while the government also waits for an EU framework to ease its implementation. The update of the EU Tobacco Tax Directive is expected to include an EU-wide excise tax on vaping products.

    “Taxing vaping products similarly to combustion cigarettes would have a negative impact on public health as it would push vapers back to smoking or the black market and discourage smokers from switching,” Landl said. “We recommend other countries and the EU to follow Ireland’s example and refrain from implementing vaping taxes.”

  • Guam Leaders Propose Excise Tax Rules for Vapes

    Guam Leaders Propose Excise Tax Rules for Vapes

    Credit: Sezerozger

    Lawmakers in Guam are proposing to impose a 10 percent excise tax on all vape products for the first year, and then raising it to 20 percent on the second year.

    Guam currently has no standardized tax regulations for what the bill describes as electronic nicotine-delivery systems (ENDS).

    The bill, if enacted into law, will make the taxation for vape products separate from the existing tobacco retail category.

    They do not include regulated cannabis products, according to Pacific News Daily.

    Sen. Joe San Agustin and three other Democrat and Republican senators proposed the new rules. San Agustin, chairman of the appropriations committee, said the proposed tax on ENDS products came after realizing the loss of millions in revenues in the Healthy Futures Fund where it showed major shortfalls in revenues from tobacco taxes.

    Under Bill 193-37, or the ENDS Excise Tax of 2023, the tax will be imposed on all ENDS products at the point of sale and will be made visible as a line item on the receipt.

    Under the bill, the annual retail license will be $200, and the annual wholesaler license will be $2,000.

  • Morocco to Raise Duties on Disposable Vapes

    Morocco to Raise Duties on Disposable Vapes

    Photo: alexlmx

    Morocco will increase customs duties on e-cigarettes under the 2024 budget, reports Morocco World News.  

    The import duties would hike the levies on disposable electronic cigarettes from 2.5 percent to 40 percent. The goal of the increase is to apply the same import duty rate to disposable electronic cigarettes as that applied to other electronic cigarettes for the 2023 fiscal year, according to the Ministry of Economy and Finance.

    The 2024 draft budget also proposes an increase in import duty from 2.5 percent to 30 percent for certain consumer products and equipment. This increase would “strengthen the protection of local production of these products and equipment and promote the establishment of production units in Morocco.”

  • Latvia to Raise Tobacco Taxes Gradually for 3 Years

    Latvia to Raise Tobacco Taxes Gradually for 3 Years

    Credit: Eyeg Elb

    The Latvian government has amended its Excise Tax Law to include a gradual increase in excise taxes on e-liquids and other next-generation tobacco products.

    E-liquids other vaping products will see their excise tax rates increase by an average of 21 percent every year in 2024, 2025 and 2026. Other tobacco “substitute products” which include nicotine pouches, will rise by 10 percent.

    The amendments will negatively impact Latvia’s efforts to curb smoking by making options to switch less attractive, according to Alberto Gómez Hernández, Community Manager of the World Vapers’ Alliance.

    “Increasing the taxation of safer nicotine products will discourage smokers from switching and push users back to smoking,” Gómez Hernández said in a press release. “The international evidence has shown that increasing taxation of e-cigarettes and e-liquids has always led to an increase in smoking, particularly among young adults and low-income groups.

    “Latvia should follow the steps of countries that are successfully reducing smoking rates by encouraging smokers to switch, such as the United Kingdom and Sweden, instead of making it more costly for them.”

    The bill will also increase the excise tax rates of heated tobacco products and combustible cigarettes by 5 percent and 5.6 percent every year, respectively.

  • Major Bill to Boost Vape Tax Introduced in Congress

    Major Bill to Boost Vape Tax Introduced in Congress

    Credit: Splitov27

    Last week, lawmakers in the U.S. introduced the CARE For Moms Act in Congress. That bill would increase healthcare for expecting and new mothers, while also exponentially increasing the taxes for vaping, roll-your-own, cigars and other tobacco products.

    The tobacco tax language in the CARE Act was copied and pasted out of the Tobacco Tax Equity Act, a bill that has been introduced as a rider in bills introduced in previous sessions of Congress but it failed to gain any traction, according to halfwheel.

    That could change after Sen. Ron Wyden and Sen. Dick Durbin have now introduced the Tobacco Tax Equity Act of 2023 in the Senate as a standalone bill, while Rep. Raja Krishnamoorthi introduced the bill in the House of Representatives.

    The tobacco tax-related language includes:

    • New taxes for e-cigarettes;
    • Doubling the tax on roll-your-own tobacco;
    • A more than 16x increase on pipe tobacco;
    • Doubling the tax on small cigars;
    • A massive tax hike for premium cigars;

    For premium cigars, the language removes the existing federal excise tax of 52.75 percent, capped at 40.26 cents per cigar, and replaces it with a weight-based tax of $49.56 per pound.

    Because it’s a weight-based tax, the difference between the existing tax and the new taxes would vary depending on how heavy the cigar is. For cigars robusto or larger, it would likely more than triple the current federal tax rate.

  • Korea Claims Vaping Companies are Evading Taxes

    Korea Claims Vaping Companies are Evading Taxes

    Credit: Vitalii Vodolazskyi

    E-cigarette companies have been evading taxes by declaring false nicotine content when importing liquid nicotine base into South Korea, according to one of the country’s lawmakers, reports The Pulse.

    The accumulated tax evasion is estimated at several trillion won.

    Between January 2020 and July 2023, 20,197 kg of liquid nicotine base was imported, according to documents from the Korea Electronic Liquid Association obtained by Lim Lee-ja of the ruling People Power Party. Approximately 3,300 bottles of e-liquid can be produced with 1 kg of liquid nicotine. Each bottle is levied at KRW53,970 ($40.60).

    Many e-cigarette companies have been mis-declaring tobacco leaf nicotine as tobacco stem and root nicotine to evade taxes since 2016, according to the association. Under Korea’s tobacco laws, nicotine extracted from tobacco stems and roots is not classified as tobacco.

    Data shows that e-cigarette companies changed their declarations from tobacco leaf nicotine to synthetic nicotine when Korea’s Individual Consumption Tax Act was amended in 2021 to impose taxes on all tobacco-derived nicotine. Synthetic nicotine is classified as a simple commodity and not subject to taxes.

    The association stated that annual distribution volume of Korean e-cigarette liquid is 30 million 30 mL bottles, with an estimated annual tax evasion of KRW1.6 trillion.

    In 2019, the Board of Audit and Inspection audited the Korea Customs Service, the Ministry of Environment and the Ministry of Health and Welfare, showing that all the inspected imported nicotine was tobacco leaf nicotine. Falsified declarations have continued since then, according to the association.

    Lim has called on the government to crack down on companies falsely declaring their products.

    Liquid nicotine base is considered a hazardous substance under the Chemical Substance Control Act, regulated by the Ministry of Environment. Imports must be reported to the minister of environment, and companies must obtain an import declaration certificate for hazardous substances.

    Those caught failing to report or falsely reporting the import of hazardous substances are subject to up to one year of imprisonment and up to KRW30 million in fines. None of the companies shown to have falsely declared nicotine products in past audits have been punished to date.

  • Ukraine Imposes Consumption Tax on Disposables

    Ukraine Imposes Consumption Tax on Disposables

    Credit: Tania

    News outlets are reporting the Dnipropetrovsk regional branch of the Ukrainian Tax Service issued a reminder that disposable vaping products will soon need to pay a consumption tax.

    President Volodimir Zelensky, recently signed Act No. 8287, introducing an electronic excise duty on vaping and other tobacco products, including e-liquids, beginning January 1, 2026.

    “The program will make it possible to trace the movement of alcohol, tobacco products, and e-atomized liquids from manufacturer/importer to final consumer. It can also control the completeness and timeliness of the payment of excise taxes on such goods,” an article states. “Does this mean that three years from now Ukraine will have an electronic atomized consumption tax, and will also introduce a traceability system, and that mandatory labelling of alcohol and tobacco products will also be implemented in this country?”

    In July this year, Ukraine said that a ban on flavored electronic nicotine-delivery system (ENDS) products other than tobacco will go into effect on July 11.

    Additionally, from January 11, 2024, a combination of text and picture warnings will be required on 65 percent of the areas on both sides of the package. The fine for violations is 30,000 Ukrainian hryvnia ($812) and 50,000 Ukrainian hryvnia for each subsequent violation.