The Malaysian Retail Electronic Cigarette Association has urged the Government to adopt a sensible approach in vape taxation following comments from the Deputy Minister of Finance that there might be an announcement for taxation on vape in the upcoming Budget 2023.
According to MRECA, back in October 2021, MOF during the tabling of Budget 2022, announced an increase in taxation for vape liquid by 200%. This taxation framework has yet to be implemented pending regulations. Datuk Adzwan Ab Manas, President of MRECA said, “We are supportive of measures taken by the Government to regulate the industry including introducing a taxation framework in the industry. We see this as the first few steps to regulate the industry and we welcome
them.”
“However, we believe the approach needs to be sensible and the rate cannot be too high. For example, the proposed RM1.20 per ml that was announced previously was very high and a 200% increase. It will see an additional RM36.00 imposed for each bottle of 30ml liquid while the retail price for that product is only at half its price. Which means, the price of products will triple in prices.”
He said this will cause vape products to be very expensive and create demand for cheaper products that do not pay tax. In addition, it will also discourage smokers from switching as vape products end up becoming more expensive than cigarettes.
The association recommends that the Government maintain an excise tax for vape liquids at RM0.40 per ml which is the existing rate to avoid seeing prices spike. It also suggested to immediately introduce regulations for the industry adding taxation framework must be complemented by sensible regulations.
This will not only ensure products meet quality and safety standards, but also provides a clear direction to the vape industry on the direction moving forward,” Datuk Adzwan concluded.
