Indonesia postpones tax on e-cigarettes until 2027

Time： 2023-12-24

The Indonesian National Electronic Cigarette Association requested that the implementation of e-cigarette taxes be delayed until 2027, fearing that the tax would have a serious impact on the e-cigarette industry. The government has yet to reply.

Recently, according to a report by local Indonesian media detik, the Indonesian Personal Atomizer Association (APVI), Indonesian Smokers Alliance (AVI), Indonesian E-liquid Oil Manufacturers Association (PPEI), Indonesian Electronic Cigarette Entrepreneurs Alliance (APPNINDO) and Bali The Indonesian National Atomizer Association (PAVENAS), formed by the Indonesian Atomizer Association (AVB), visited the Ministry of Finance in Jakarta and asked the government to postpone the cigarette tax on e-cigarettes to 2027 and not increase the consumption tax when levying the cigarette tax. .

PAVENAS also encourages governments to be transparent and fair in formulating policies, involving businesses directly.

APVI Secretary General Garindra Kartasasmita said on behalf of PAVENAS that the plan to impose cigarette taxes on e-cigarettes while raising excise taxes is a heavy blow to entrepreneurs, consumers and industry players. .

"Moreover, this plan was never communicated and discussed with us in advance. It should be taken into account that the e-cigarette industry is a relatively new industry and most industry players are from the community and small, medium and micro enterprises," he said.

Galindra emphasized that the plan to impose a cigarette tax of 10% of the current excise tax on e-cigarettes, as well as to increase the excise tax on e-cigarettes by 15% (which was previously stipulated through PMK No. 192 of 2022), will bring new challenges to the industry. Come with a heavy burden.

"If this is done, the tax burden on the e-cigarette category will increase by more than 25% by 2024. This amount is even higher than the increase in excise taxes on traditional cigarettes in 2020," he said.

Galindra said plans to impose a cigarette tax on e-cigarettes in 2024 appear to have been rushed without any forethought. The parties affected by the policy were not involved in the entire development process.

"We request the government to provide wisdom on the plan to impose cigarette tax on e-cigarettes. It was only during the meeting on Socialization of Excise Department Policy 2024 held on November 28, 2023 that the Directorate General of Financial Balance and the Directorate General of Customs and Excise related information and said it would take effect on January 1, 2024. In other words, less than a month.

"There was no discussion process and we directly conveyed our objections to the sudden timing of implementation and the impact of the triple strike," he said.

To this end, PAVENAS urges the government to impose a cigarette tax on e-cigarettes at least five years from now. This requirement reflects the implementation of traditional cigarette taxes, which also have a transition period.

"We hope that the policy-making process related to the e-cigarette industry can be conducted in an open and transparent manner, allowing industry players affected by regulation to participate. This is very important for the business continuity of the entire industry, including investment and employment," he explain.

After receiving no response to both letters and the request for a hearing, PAVENAS decided to go directly to the Ministry of Finance to demand explanations and more transparency from the government, and in particular from the General Directorate for Fiscal Balance.

PAVENAS members hope that through their direct presence, the government will be willing to engage in discussions and hold hearings with parties affected by the imposition of an e-cigarette cigarette tax in 2024.

"If cigarette taxes remain on e-cigarettes in 2024, we are prepared to take legal action to seek justice for corporate actors," Galindra concluded.

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