The Indonesian government has introduced a new 10% tax on e-cigarettes starting January 1, 2024. This brings vaping products in line with existing excise duties on traditional tobacco cigarettes.
New Regulation Adds E-Cig Tax
Under the new Finance Ministry Regulation No. 143/PMK/2023, e-cigarettes are now classified as taxable tobacco products.
The regulation comes alongside a separate rule, No. 191/2022, hiking tobacco excise taxes by an average of 10% next year. Together, these policies make e-cigarettes less affordable for Indonesian consumers.
Authorities say taxing vapes provides consistency with conventional cigarettes, which have faced excise duties since 2014. The Finance Ministry stated that ultimately e-cigarettes impact public health similarly to traditional tobacco products.
Vaping Industry Objects to New Tax
Indonesian vaping companies have pushed back against the surprise e-cigarette tax.
Industry group the Indonesian Personal Vaporizer Association argued the tax was imposed without sufficient discussion. Most vaping businesses are small or medium-sized enterprises, they noted, and will struggle with this rapid policy change.
But the government maintains the tax creates a level playing field between vapes and cigarettes based on health considerations.
Indonesia’s Smoking Rates Still Rising
Indonesia’s vaping tax comes amid forecasts that smoking will increase in the country, even as global tobacco usage declines.
Per Statista data, Indonesia had 112 million smokers in 2021. This figure is projected to reach 123 million by 2030 despite broader anti-smoking efforts.
New taxes on vapes aim to curb their growth in appeal, especially among youth. But traditional cigarette use remains deeply entrenched in Indonesia.
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