Entrepreneurs Ask The Ministry Of Finance To Postpone The Implementation Of Electric Cigarette Taxes Until 2027

The Association of Indonesian National Vapes (PAVENAS) asked the Ministry of Finance to postpone the implementation of taxation for e-cigarettes until 2027.

The action of a combination of entrepreneurs, consumers, and industry players in innovative tobacco products asked the Ministry of Finance to postpone the implementation of the electric cigarette tax from 2024 to 2027, and there was no increase in excise during the implementation of the cigarette tax.

"PAVENAS also encourages the Government to be transparent and act fairly in policy formulation by directly involving business actors," Secretary General of APVI Garindra in his official statement, quoted Wednesday, December 27.

Garindra said that the plan to impose cigarette taxes on e-cigarettes at the same time as the increase in excise was a severe blow to entrepreneurs, consumers, and industry players.

With the plan to impose a cigarette tax on e-cigarettes with an amount of 10 percent of the applicable excise rate, plus an increase in excise rates for electronic cigarettes by 15 percent, e-cigarettes will receive an increase in tax expense by more than 25 percent in 2024.

"It should be considered that the electric cigarette industry is a relatively new industry and most of these industry players come from communities and MSMEs," he said.

Garindra conveyed that the plan to impose cigarette taxes on e-cigarettes in 2024 seemed very hasty. In addition, parties who will be affected by the policy are not involved throughout the formulation process.

"Therefore, PAVENAS asks for the Government's discretion regarding the plan to impose Cigarette Tax on Electric Cigarettes, considering that information related to this discourse has only been conveyed by the Directorate General of Financial Balance and the Directorate General of Customs and Excise at a Policy Socialization meeting in the Excise Sector in 2024 on November 28, 2023," he explained.

In addition, PAVENAS urges the government to implement the imposition of cigarette taxes for e-cigarettes in the next five years, namely in 2027.

On that occasion, the Head of the DPP Organization of the Indonesian Vaporezer Personal Association (APVI) Hasiholan Manurung said this request reflected on the implementation of the conventional cigarette tax which also has a transition period.

Meanwhile, referring to Law no. 28 of 2009 concerning Regional Taxes and Regional Retribution (UU 28/2009) it is stipulated that the implementation of Cigarette Taxes will begin in 2014 so that there will be 5 years of transition time for the industry.

In addition, when the conventional cigarette tax was implemented, at that time the government determined that there would be no increase in tobacco excise so that the industry would not experience double burdens.

"We hope that the policy formulation process related to the electric cigarette industry will be carried out openly and transparently to industry players affected by these regulations. This is important for business continuity, including investment and employment in this sector as a whole," he said.