JAKARTA: Beginning January 1, 2024, Indonesia will introduce a new tax on e-cigarettes, adding to existing excise duties to help regulate vaping, the country’s finance ministry announced on Saturday, December 30, 2023.
As the largest economy in Southeast Asia, Indonesia has set the new tax at 10% of the existing excise tariff for electronic cigarettes, the ministry revealed in a statement. “Long-term use of electronic cigarettes has been shown to impact health,” the ministry stated, emphasizing that the tax aims to create parity between e-cigarettes and traditional tobacco products.
This move follows Indonesia’s 2018 implementation of a 57% excise tax on the essences used in e-cigarettes. The nation, known for its high smoking rates, has long imposed taxes on conventional cigarettes.
A coalition of e-cigarette manufacturers and users, known as PAVENAS, expressed concerns over the lack of consultation and the timing of the new tax, particularly given the upcoming increase in excise tariffs.
The group stated that they might consider legal action if the government proceeds with the tax.
TEMPO.CO, Jakarta: The Indonesian Vapor Entrepreneurs Association (APVI) has responded critically to the government’s new e-cigarette tax, effective January 1, 2024.
Garindra Kartasasmita, APVI Secretary-General, criticized the implementation of the tax, citing a lack of prior warning and discussion, as well as poor timing. “It feels unfair to us. Besides the lack of dissemination, there was no discussion, no time limitation, and it was imposed right as the excise increased by 15 percent,” Kartasasmita told Tempo on January 2.
He warned that the new tax policy would likely lead to higher market prices for e-cigarettes.
According to Kartasasmita, the legal framework for the e-cigarette tax is vague. “The Law No. 1 of 2022 on Financial Relations Between The Central Government And Regional Governments did not mention a single word on e-cigarettes,” he said.
Regulatory changes must follow proper procedures, Kartasasmita continued. “There must be public hearings and discussions with affected parties. If planning to impose a tax, there must be a discussion with those paying it,” he argued. “Don’t move arbitrarily. Don’t let the government intervene in businesses for the interest of certain groups.”
Earlier, the Finance Ministry issued Finance Minister Regulation No. 143/PMK/2023, detailing the procedures for collecting, withholding, and depositing taxes on cigarettes, including e-cigarettes.
According to jdih.kemenkeu.go.id, the tax will be 10% of the cigarette excise and will be collected alongside the cigarette excise by the Customs and Excise Office.