Updated December 31st, 2023 at 16:51 IST

Indonesia to implement a new tax on e-cigarettes starting January 1

This move aims to address health concerns associated with prolonged e-cigarette use.

Reported by: Business Desk
Indonesia | Image:Pexels Photo
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In a bid to tackle vaping and its potential health impacts, Indonesia is gearing up to introduce a fresh tax on e-cigarettes, set to be enforced from the beginning of the new year, as announced by the finance ministry.

The Southeast Asian giant will apply a 10 per cent levy on the excise tariff for electronic cigarettes, stated the ministry in a released statement. This move aims not only to address health concerns associated with prolonged e-cigarette use but also to create a balance in taxation between these modern alternatives and traditional cigarettes.

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The e-cig taxation

The decision follows Indonesia's earlier imposition, in 2018, of a hefty 57 per cent excise tax on essences used in e-cigarettes. Notably, Indonesia has long placed taxes on conventional cigarette products.

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However, the announcement of this new tax has faced opposition from a coalition of e-cigarette manufacturers and consumers, known as PAVENAS. Criticising the lack of consultation and the timing of the tax implementation, especially considering the impending rise in excise tariffs for the product in the upcoming year, the group hinted at potential legal action to challenge the government's decision.

Balancing analysis

The group's statement reflects concerns regarding the abrupt introduction of the tax, which they argue lacks comprehensive discussion and may adversely impact both producers and consumers in the e-cigarette industry.

Indonesia's move to levy taxes on e-cigarettes aligns with global efforts to regulate and mitigate the use of alternative nicotine products. By equalising taxation between e-cigarettes and conventional tobacco products, the government aims to address health risks while ensuring fairness in the market.

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As the government pushes forward with its plans, the clash between public health concerns, industry interests, and regulatory measures continues to be a pressing issue in the evolving landscape of smoking alternatives and associated policies.

(with Reuters inputs)

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Published December 31st, 2023 at 16:51 IST