Peru Proposes Up to 100% Tax on E-Cigarettes

Peru’s Congress is evaluating a legislative proposal to impose a Selective Consumption Tax (ISC) of up to 100% on all electronic cigarettes. Drafted by Congressman José Cueto, the bill targets both nicotine and non-nicotine devices to curb a 15.9% youth usage rate and recover over S/ 8 million in annual fiscal losses.

The Fiscal Mechanics: Expanding the ISC Framework

The legislative initiative seeks to modify the Single Ordered Text of the IGV and ISC Law. By officially categorizing Electronic Nicotine Delivery Systems (SEAN) and Non-Nicotine Systems (SESN) as taxable goods, the government aims to equalize the fiscal treatment of vapes with traditional combustible tobacco. The proposed tax framework establishes a sliding scale from 20% to 100% applied directly to the retail price. If passed, the Executive Branch will have a strict 90-day window to finalize the specific ad valorem or specific tax rates.

From an economic perspective, the Peruvian vape market has expanded rapidly without corresponding tax capture. Official import values for vaping devices and e-liquids surged from $1.3 million in 2019 to over $7.9 million in 2023. Proponents argue the ISC will correct negative externalities by funding public health initiatives. However, industry analysts warn that a 100% retail markup could inadvertently mirror the regulatory failures of neighboring countries, pushing consumers toward an untaxed, unregulated black market.

Demographic Shifts and the Youth Epidemic

Public health data forms the backbone of Cueto’s proposal. Recent 2024 studies indicate that vaping prevalence among Peruvian youth aged 11 to 21 has reached 15.9%. More alarmingly, the average age of initiation has dropped to 13.7 years. The bill highlights that aggressive flavor marketing and frictionless access via home delivery apps—where age verification is notoriously lax—have severely eroded the perception of risk among adolescents.

Economic & Demographic Metric	Data Point (Peru)
Proposed ISC Tax Rate	20% to 100% of Retail Price
Lost Annual Tax Revenue	> S/ 8 Million
Vape Import Value (2023)	$7.9 Million (Up from $1.3M in 2019)
Youth Usage Rate (Ages 11-21)	15.9%
Average Age of Initiation	13.7 Years Old

Regional Precedents and Environmental Trade-offs

Peru’s regulatory pivot aligns with a broader Latin American crackdown. Nations like Mexico, Brazil, Uruguay, and Argentina have implemented severe restrictions or outright bans on electronic cigarettes. By opting for taxation rather than total prohibition, Peru is attempting to balance market realities with public health mandates.

Beyond human health, the legislation introduces an environmental mandate. The exponential growth of disposable vapes has created a surge in hazardous e-waste, combining lithium-ion batteries, chemical residues, and single-use plastics. The proposed ISC aims to artificially inflate prices to depress demand, theoretically reducing both youth nicotine dependency and the environmental footprint of discarded devices.

Read more: Major Tobacco Companies Lead Vape Imports in Peru Amid Low Regulation
News reference: Proyecto de ley busca aplicar impuestos de hasta el 100% al precio de venta de los vapeadores

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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.