China's New Vape Tax May Not Affect Prices in Other Countries

Beginning Nov. 1, the Chinese government will tax vaping products. This announcement was made jointly by the Chinese Ministry of Finance, the General Administration of Customs, and the State Taxation Administration.

Multiple news sources claim that the two-pronged tax will include a surcharge of 36 percent on the production and import of e-cigarettes as well as a tax of 11 percent on wholesale distribution in China.

This tax represents almost a full year of turmoil for Chinese vapers. During this time, the government took tight control over the Chinese domestic vaping market by imposing strict manufacturing standards and restricting the choices of vaping products available to Chinese residents.


Will vapers in other nations be affected by the tax?

Although details could be more precise, news media report that export products may be exempt from taxes. Global Times reported that the government released a press release stating that an "export tax refund policy and exemption policy" would apply to taxpayers who export e-cigarettes.

The publication also noted that exports could continue to benefit from the tax rebate policy and that e-cigarettes would continue to be encouraged.

This will be bad news for Chinese vapers and good news for everyone else. Nearly all of the vaping hardware sold worldwide is made in China. Prices worldwide would be affected if there was a substantial tax on exports by Chinese manufacturers.


Vape taxes will help in preserving tobacco sales.

In accordance with the state-run Xinhua news agency, the agencies claim the tax will "improve consumption tax system" and give more play to its role in encouraging healthy consumption.

In reality, the tax will only help to protect the state-owned tobacco industry from low-risk non-combustible nicotine alternatives. About five percent of China's annual tax revenues comes from cigarettes. Over 300 million people in China smoke cigarettes.

The tax will be in effect just a year after 's vaping industry was brought under the control of the Chinese State Tobacco Monopoly Administration. The STMA oversees all aspects of China's huge tobacco market. This includes product standards, manufacturing processes, pricing, distribution, and licensing. It is housed under the same roof of the China National Tobacco Corporation, the world's largest cigarette producer.

After the state tobacco monopoly gained control over the vaping industry, regulators created rules and standards for wholesalers, retailers, and manufacturers. This has been a rapid process with many important new regulations being put in place over the last 11 months. Since Oct. 1, all vaping products in China can only contain tobacco-flavored liquids

It is also important to note that regulations help to legitimize an already shaky industry. Some investors were concerned that China might ban e-cigarettes as Hong Kong did last October. Similar hardline policies have been taken by many other Asian countries like India, Thailand, Singapore, and Thailand. It is becoming increasingly unlikely that this will happen. China has given vaping a legal place to exist by incorporating it into the regulatory framework of the tobacco industry. It has still to be determined if the sector will survive by simply living or if the regulatory crackdown will disincentivize further growth and investment.

Smokers started the vaping revolution without the help of the tobacco industry and anti-smoking crusaders. We believe that vapers should be able to innovate to improve their lives.

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