Proposal to impose 50% tax on electronic devices used for electronic cigarettes

The Ministry of Finance is seeking comments on the draft Decree amending and supplementing a number of articles of Decree No. 26 of the Government on Export Tariffs, Preferential Import Tariffs, List of goods and absolute tax rates, mixed taxes, and import taxes outside tariff quotas.

Including preferential import tax rates for electronic devices used for electronic cigarettes and similar personal vaporizers under item code 8543.40.00.

Through the review of preferential import tax rates stipulated in Decree No. 26, the Ministry of Finance found that it is necessary to apply preferential import tax rates to product code 8543.40.00 similar to the import tax rates of electronic cigarettes stipulated in group 24.04 to limit the use of products harmful to health.

According to the report of the Ministry of Finance, the current policy on electronic cigarettes is as follows: Cigarettes are highly sensitive and subject to specialized management, so since joining the WTO and throughout the negotiation process of FTAs, Vietnam has always had a unified view of maintaining the maximum tax commitment level, not reducing import tax rates or if it is necessary to reduce, it will extend the reduction period as long as possible. This is a product that affects human health, so it is necessary to limit its use.

Finance - Banking - Proposal to impose 50% tax on electronic devices used for electronic cigarettes — Proposal to impose 50% tax on electronic devices used for electronic cigarettes.

Regarding import tax, tobacco products have MFN tax rates (preferential export tax and import tax rates) from 30% to 135%. Of which, the tax rate of 135% applies to cigars and cigarettes in group 24.02.

The tax rate of 50% applies to goods under heading 24.03 "Manufactured tobacco leaves and other manufactured tobacco substitutes such as "homogenised" or "reconstituted" tobacco, tobacco extracts and essences".

Meanwhile, electronic cigarettes consist of two main parts: the solution (containing nicotine, or tobacco substitutes...) and the device used to burn and create smoke.

Electronic cigarettes currently include two forms: electronic devices used for electronic cigarettes with attached vaporizing solution, classified in group 24.04 (MFN import tax rate is 50%).

The second form is electronic devices for electronic cigarettes and separate vaporizers, in which the part of the device used to burn and create smoke is classified under HS code 8543.40.00 "Electronic devices for electronic cigarettes and similar personal electrovaporizers"; the vaporizer part is classified under group 24.04.

In the Preferential Import Tariff issued with Decree No. 26, the vaporized solution in electronic cigarettes has the same uses and nature as raw materials to replace tobacco leaves, tobacco leaf extracts and essences in group 24.03.

Therefore, the Government has agreed to regulate the MFN tax rate for electronic cigarettes (containing vapor solution) and vapor solution with the MFN tax rate of 50% similar to the tax rate for alternative tobacco products in group 24.03.

Regarding the tax rate of electronic devices used for electronic cigarettes and personal vaporizers, the Ministry of Finance proposes to apply the same HS code 8543.40.00 as the tax rate of electronic cigarettes in group 24.04 as prescribed in Decree 26.

In addition, there is currently no product policy for electronic cigarette products, so this product has not been officially imported and circulated in Vietnam.

According to the Ministry of Finance, because electronic cigarettes have not been officially imported into Vietnam, the regulation of the MFN tax rate of 50% for this item does not affect the State budget revenue.

On the other hand, the regulation of MFN tax rate of 50% is also to limit fraud when this item is allowed to be imported in the coming time, unify tax policy for tobacco products, contributing to limiting consumption in Vietnam .

Source