MRECA: Vape Tax Rate Needs To Be Sensible
MRECA recommends for the Government to maintain excise tax for vape liquids at RM0.40 per ml which is the existing rate to avoid seeing prices spike up.
Maintain tax rate at RM0.40 per ml
Kuala Lumpur, 23 February 2023: Malaysian Retail Electronic Cigarette Association (MRECA) today urged the Government to adopt a sensible approach in vape taxation. MRECA’s comments comes following reports yesterday that the Deputy Minister of Finance stating there might be announcement for taxation on vape in the upcoming Budget2023.
In October 2021, the Ministry of Finance during the tabling of Budget 2022, announced an increase on taxation for vape liquid by 200%. This taxation framework has yet to be implemented pending regulations.
Reasonable Tax Rate
Datuk Adzwan Ab Manas, President of MRECA says, “We are supportive of measures taken by the Government to regulate the industry including introducing taxation framework in the industry. We see this as a 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 a 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.”
“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.”
“MRECA recommends for the Government to maintain excise tax for vape liquids at RM0.40 per ml which is the existing rate to avoid seeing prices spike up.
“In addition, MRECA also urges the Government to immediately introduce regulations for the industry. Taxation framework must be complemented by sensible regulations. It will not only ensure products meets quality and safety standards, but also provides a clear direction to the vape industry on the direction moving forward,” Datuk Adzwan concludes.