Malaysia's Vaping Excise Tax and Manufacturing Registration

Vape manufacturers producing liquid or gel products containing nicotine in Malaysia must register their manufacturing activities with the Customs Department by April 30 to avoid compounds. The government has imposed an excise tax of 40 sen per millilitre on electronic cigarette (e-cigarette) liquid or gel containing nicotine from April 1. Read more about the new regulations on vaping in Malaysia.

Vape Liquid Manufacturers Urged to Register for New Excise Duty in Malaysia

Malaysian vape manufacturers producing liquid or gel products containing nicotine are required to register their manufacturing activities with the Customs Department before April 30, 2023, to avoid compounds. The Ministry of Finance (MOF) recently announced the imposition of an excise tax of 40 sen per millilitre on e-cigarette liquid or gel containing nicotine from April 1. The tax will enable the government to tax the vape industry worth over RM2 billion and help discourage the use of vapes. However, the decision to delist liquid or gel nicotine from the list of controlled substances scheduled under the Poisons Act has been met with fierce criticism from many involved in public health.

Background

The delisting of liquid or gel nicotine from the Poisons Act 1952 was initiated to allow for e-cigarettes and vape products to be taxed in Malaysia. Local manufacturers who produce liquid or gel products containing nicotine are now required to register their manufacturing activities with the Customs Department by April 30, 2023. Early registration can prevent manufacturers from being charged a compound for the offense of late registration. The new excise duty will enable the government to tax the vape industry that is estimated to be worth over RM2 billion and discourage the use of vapes.

Excise Duty and Tax Collection

Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announced the government’s plan to impose an excise tax on liquid or gel products containing nicotine when he retabled Budget 2023 in February. The previous government also proposed to extend tax collection from gel or liquid products containing nicotine for vapes and e-cigarettes in the tabling of Budget 2022 by imposing a tax of RM1.20 per millilitre. However, the plan was postponed because nicotine vape liquid was still classified as a Class C poison under the Poisons Act.

Part of the excise duty revenue will be reallocated to the Ministry of Health (MOH) to improve the quality of health services. The new excise duty will also help improve the rules and control of excise duty goods by the customs to avoid leakage of national income.

Criticism Save

The government’s decision to delist liquid or gel nicotine from the list of controlled substances scheduled under the Poisons Act has been met with fierce criticism. Former health minister Khairy Jamaluddin and independent think tank and public health advocate Galen Centre for Health and Social Policy are among those who strongly object to the decision.

Khairy said a new law must first be in place to regulate the sale of vape liquid before granting an exemption from the Poisons Act to levy the excise duty on the substance. The Galen Centre for Health and Social Policy called the decision an “exceptionally regressive move, which has stunned many who work in public health, especially those in tobacco control.” The move not only legitimizes the use of nicotine e-cigarettes and vapes but also allows local industries to manufacture such products that are mostly imported from China now, so that they could be taxed.

Future Outlook

The government plans to introduce a new law to regulate all smoking products, including those containing nicotine. However, it will be a “free-for-all” season for vape players in the meantime, as no action can be taken against the sale and marketing of vapes. The lack of regulation and safeguards may lead to the misuse of nicotine in drinks and food, and cases of nicotine poisoning.

In conclusion, the requirement for vape manufacturers in Malaysia to register their manufacturing activities before April 30, 2023, is a significant step towards comprehensive industry compliance and smooth tax collection. The imposition of an excise tax on liquid or gel products containing nicotine will enable the government to tax the vape industry, which is estimated to be worth over RM2 billion, and help discourage the use of vapes. However, the government’s decision to delist liquid or gel nicotine from the list of controlled substances scheduled under the Poisons Act has been met with fierce criticism. The lack of regulation and safeguards may lead to the misuse of nicotine in drinks and food, and cases of nicotine poisoning. The government needs to step up and do the right thing by tabling the revised Tobacco and Smoking Control Bill in Parliament as soon as possible to regulate the sale and use of vapes and tobacco products.

Read more: Malaysia Imposes Excise Duty on Vape Liquids with Nicotine

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Matthew Ma

Marketing at Ecigator

With over a decade of experience in the e-cigarette industry, Matthew Ma is a seasoned expert in both the manufacturing and usage aspects of vaping products. His extensive background has provided him with a deep understanding of the intricacies and evolving dynamics of e-cigarettes.