Malaysia postpones heavy tax on e-liquids

The Malaysian government has postponed the imposition of a new tax on nicotine e-liquids after consumer and industry complaints about the high rates on offer. The plan would also have tripled the existing tax on nicotine-free e-liquids. The vaping taxes were to come into effect on January 1.

The postponement was announced earlier this week by the Royal Malaysian Customs Department. No reason was given for the delay, according to The Edge Markets.

Finance Minister Tengku Zafrul Aziz announced on October 29 that the government’s 2022 budget includes new taxes on nicotine-containing vaping products, which are currently illegal in consumer products sold in Malaysia. A few days earlier, Health Minister Khairy Jamaluddin informed the World Health Organization that the country would legalize and regulate vaping products to prevent access to young people.

But the details of the new tax have proven problematic. The expected tax rate was 1.20 Malaysian ringgit (RM) per millilitre, or about $0.29/mL. The current tax of RM0.40 on nicotine-free vape juice would have tripled under the new plan.

Such a high tax rate – around $17 on a 60ml bottle of e-liquid – would have forced legal sellers to compete with much cheaper black market products. “The tax increase will make vaping products more expensive than tobacco cigarettes in Malaysia,” Malaysian Vape Industry Advocacy (MVIA) chairman Rizani Zakaria told The New Straits Times.

Malaysian vaping advocates oppose the high tax rate, and at least one medical organization has also urged the government to pass taxes that recognize the relative low risk of vaping compared to smoking.

“Levels of taxation of tobacco harm reduction (THR) products in Malaysia must remain commensurate with the risks, compared to high-risk products such as cigarettes,” said the president of the Federation of Private Doctors Associations of Malaysia. , Steven Chow, in a press release last November.

Malaysia currently bans the sale of nicotine for non-medical purposes, and police raids have occasionally disrupted the country’s thriving vape business. Eliminating the current ban and regulating nicotine vaping would make Malaysia one of the few countries in Southeast Asia that does not ban vaping.

Smokers created vaping without help from the tobacco industry or anti-tobacco crusaders, and I believe vapers have a right to continue innovating to help themselves. My goal is to provide clear and honest information about the challenges vaping faces from lawmakers, regulators, and misinformation brokers. I am a member of the CASAA Board of Directors, but my opinions are not necessarily those of CASAA, and vice versa. You can find me on Twitter @whycherrywhy

Aron M. Newman