In South Korea, as vapes containing solid nicotine are taxed only based on the weight of nicotine, their tax burden is much lower than that of vape products containing liquid nicotine, which has sparked disputes over the fairness of the tax system. Experts call for the prompt revision of relevant systems to prevent market imbalance and the weakening of policy effects.
Key points:
- At present, the tax burden of vape products in South Korea varies significantly depending on their internal structure.
- Electronic cigarette products containing solid nicotine are taxed based on weight, and the tax rate is significantly lower than that of liquid types.
- Experts point out that this structural difference may undermine the credibility of the tax system and provide some enterprises with room for evasion.
- Although the South Korean government is formulating a new tax system for new tobacco products such as synthetic nicotine, it still lacks specific countermeasures for solid products.
Controversy over low tax burden on solid nicotine vapes in South Korea
According to Nate news on May 13th, against the backdrop of the rapid expansion of the South Korean vape market, the issue of differences in the tax system based on product structure is drawing attention in terms of regulation and fairness.
The Center for Tobacco Regulation and Education pointed out on May 13th that the solid nicotine vape products currently in circulation are in a tax system blind spot, and the current tax calculation method needs to be adjusted as soon as possible.
vape products in South Korea varies significantly
At present, the vape products in the South Korean market are mainly divided into two categories: One is the liquid type products with nicotine e-liquid impregnated cotton cores; the other category is solid products that combine nicotine in solid form with non-nicotine liquids. This structural difference directly affects the tax measurement basis and the final tax burden.
Vapes containing liquid nicotine are subject to a tobacco consumption tax based on the volume of the nicotine liquid they contain, with a tax rate of 628 Korean won per milliliter. For comparison, a pack of traditional cigarettes is taxed at approximately 1,007 Korean won (0.7 US dollars), while heated non-combustible cartridges with the same nicotine content cost about 641 Korean won (0.5 US dollars). However, electronic cigarettes containing solid nicotine are taxed only based on the weight of the nicotine itself, and the liquid part used in combination with it is not included in the tax base.
For example, for a product of 2 milliliters of liquid combined with 0.8 grams of solid nicotine, only about 70 Korean won (0.05 US dollars) needs to be paid. When 10 milliliters of liquid is combined with 2 grams of solid nicotine, the tax amount is approximately 176 Korean won (0.1 US dollars), which is significantly lower than that of other products with the same nicotine content.
This tax system arrangement leads to unequal tax treatment for different products in the market, creating a “structural tax burden loophole”. Some experts point out that this not only weakens the fairness of the tax system and policy consistency, but may also have an impact on government tax revenue and provide some enterprises with space to avoid taxes through product design, thereby gaining an unfair advantage in market competition.
Alleged “ultra-low tax rate” dividend
Although the government has begun to explore the tax system for new tobacco products, including synthetic nicotine, there is still a lack of clear mechanisms for the specific supervision and tax treatment of vapes containing solid nicotine. Industry insiders generally call for the simultaneous advancement of refined institutional reform.
Lee Sung-kyu, director of the Tobacco Control Research and Education Center, said, “The tax system for tobacco products is not only related to fiscal revenue, but also directly affects the effectiveness of public health policies.”
