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Indonesia kicks off 2024 with 10% e-cigarette tax to industry opposition
Following a so-called transition period of five years, the government has kicked off 2024 by imposing a 10 percent e-cigarette tax, sparking opposition from industry players.
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A shopkeeper holds up electronic cigarette liquids, also called e-liquids or vape juice, on Oct. 1, 2018 at a store in Tebet, South Jakarta. (JP/Seto Wardhana)
T
he government rang in the New Year with a 10 percent tax on electronic cigarettes effective as of Jan. 1, a move that comes after years of delay and has sparked opposition from industry players calling for the Finance Ministry to postpone the policy.
The tax is calculated based on the excise imposed on electronic cigarettes, also called e-cigarettes or vape, as stipulated in Finance Ministerial Regulation (PMK) No. 143/2023. The ministry said the excise had been implemented in 2018 but that the related tax had not been imposed in line with a 2009 regulation that allowed a five-year transition period, even though the two policies were intended to work in tandem.
In a statement on Friday, the Finance Ministry said the e-cigarette tax aimed to provide a level playing field for all tobacco products, underlining that both the tax and excise had been imposed on conventional cigarettes since 2014.
“In the long run, electronic cigarettes are indicated to affect [public] health, and its content falls under the category of [controlled] consumer goods,” ministry spokesperson Deni Surjantoro said, as quoted in the statement.
Read also: Plastic, sweet beverage excise to cause more problems than it solves: Businesses
The ministry also stated that 50 percent of revenues from the e-cigarette tax would be used for public health and law enforcement.
The e-cigarette excise generated Rp 1.75 trillion (US$113.2 million) in revenue in 2023, which was just 1 percent of the total revenue from tobacco tax that year, the ministry said.
