Implement excise duty on nicotine vape e-liquids to raise tax revenue

LOCAL vape associations are urging the Government to quickly implement excise duty for vape e-liquids with nicotine to maximise the tax revenue collected from the vape industry.

These comments follow a recent report where the Malaysian Customs stated that the excise collection for vape liquids amounted to less than RM100,000 in 1Q 2021, much lower than the RM300 mil excise duty revenue estimated by the Malaysian Vape Chamber of Commerce (MVCC).

Currently, the Government imposes 0% excise tax on vape devices and 40 cents on each millilitre of non-nicotine vape e-liquids effective Jan 1, 2021.

Ashraf Rozali

“We are already in 2Q 2021 and if only RM100,000 is collected in the first quarter of this year, this shows that the taxation framework on vape products is ineffective as it does not cover all the products sold in the market,” commented MVCC’s information head Ashraf Rozali.

“The Government must take into account our proposal to implement excise duties on vape e-liquids with nicotine to maximise the amount of tax revenue collected from the vape industry.”

“If excise duty is implemented for vape e-liquids with nicotine, the Government will be able to gain additional revenue that can be injected into the country, more so at time like this where funds are needed to combat the pandemic.”

According to the Health Ministry’s (MOH) reports, there are about 1.12 million vape users in Malaysia.

According to Ashraf, the current low tax collection is due to excise duty being only imposed on non-nicotine vape e-liquids which makes up only 3% of the vape market. In contrast, vape e-liquids with nicotine which makes up 97% of the market share is currently not taxed or unregulated.

Regulating vape industry

According to Malaysian Vape Industry Advocacy (MVIA) president, Rizani Zakaria, the industry is open to work with the Government to provide input on developing regulations for the vape industry.

Rizani Zakaria

“Industry players have always supported the Government in its move to implement a taxation framework on vape e-liquids with nicotine. If the Government decides to implement this excise duty, it will be able to collect more tax revenue from the industry,” noted Rizani.

“I believe the vape industry can be one of the sectors that can help revive the country’s economy by providing high yields to the Government as well as employment opportunities. All that is needed is to refine the taxation framework and implement it.”

Although the vape industry does not receive much attention from the Government, the fact is that this industry is currently valued at RM2.27 bil and has the capability to garner tax revenue for the country if a taxation framework is implemented properly.

“Imagine if the Government focuses on the industry and implements regulation, really pays attention and regulates, we are confident that the local vape industry will be one of the main contributors to the national economy,” adds Rizani. – June 24, 2021

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