E-Cigarettes Subject to Tax! See the Regulation and Guidelines Here

Cigarette tax is collected by the Customs and Excise Office simultaneously with the collection of cigarette excise. To calculate cigarette tax, the first step is determining the cigarette tax base.

The cigarette tax base refers to the excise duty stipulated by the central government on cigarettes. To calculate cigarette tax, the first step is to determine the cigarette tax base. The rate used to calculate cigarette tax amounts to 10%. The following is the procedure for the calculation of cigarette tax:

Cigarette Tax = Tax Base x Tax Rate

Please note that supplies of tobacco products manufactured domestically or overseas are subject to value added tax (VAT). Supplies of tobacco products are subject to VAT using other values multiplied by the VAT rate as the tax base.

The VAT rate applicable from 1 April 2022 amounts to 11%. From 1 January 2025, the rate becomes 12%. The other values are obtained from the following formula:

Other Value = 100/(100+t) x Tobacco Product Retail Selling Price

Based on this calculation, the VAT rate on tobacco products will be 9.9% from 1 April 2022 and 10.7% from 1 January 2025. The following is how VAT on supplies of tobacco products is calculated:

VAT = Rate x Tobacco Product Retail Selling Price

Those of you wishing to further explore these changes may read the tax guidelines titled The Tax on Cigarettes, Including E-Cigarettes on Perpajakan DDTC.

These guidelines will provide detailed information on the tax on e-cigarettes pursuant to MoF Reg. 143/2023, including the legal basis, background, definition, tax treatment and sample cases related to this tax.

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