South Korea to Tax E-Cigarettes with New Nicotine Law
A South Korean bill to revise the Tobacco Business Act, which would classify synthetic nicotine as a tobacco product, has cleared its first major hurdle at the National Assembly. The amendment, approved by the Strategy and Finance Committee’s subcommittee on economic and fiscal policy, expands the legal definition of tobacco from being derived from “tobacco leaf” to “tobacco or nicotine.”
If the bill passes the main session, liquid e-cigarettes using synthetic nicotine, which are currently treated as industrial goods, will be subject to the same regulations and taxes as conventional tobacco for the first time in 37 years. This would include the tobacco consumption tax and the National Health Promotion Levy. The move is expected to generate over 900 billion won ($646 million) in additional annual tax revenue, addressing an estimated 3.39 trillion won in uncollected levies over the past four years.
Momentum for the change grew after a government-commissioned study found synthetic nicotine contains about twice as many harmful substances as its natural counterpart. Lawmakers also noted that 35 of 38 OECD member states already regulate synthetic nicotine e-cigarettes as tobacco products. To minimize the impact on small businesses, the revised bill includes a two-year grace period for implementing distance restrictions between e-cigarette retailers. The bill will now be reviewed by further committees before a final vote.
- News source: E-cigarettes may face new taxation soon
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