South Korea’s synthetic nicotine may be included in the new tax administration

South Korea will impose a tax on synthetic nicotine e-vape, which is expected to raise more than 100 billion won over the next five years. Currently, there are no taxes or costs involved in synthesizing nicotine. In the absence of regulation, Chinese companies are profiting profitably. One study showed that vape users were 1.8 times more likely to continue smoking than traditional cigarette users. Members of Congress have called for synthetic nicotine to be included in tax and regulatory frameworks.

 

According to South Korea’s report on the 8th, South Korean member of Parliament ChoiHye-young (ChoiHye-young), according to data obtained by the customs, the total amount of electronic cigarette oil imported in 2021 is 378 tons, of which 98 tons contain synthetic nicotine, accounting for 26% of the total.

 

Currently, there is an excise tax on natural tobacco tar, a new value-added tax, and a national health promotion fee, as well as increases in local tobacco excise taxes and local education taxes. However, there are no taxes or costs involved in synthesizing nicotine. According to an analysis by the National Assembly Budget Policy Office, synthetic nicotine will be subject to the same tax and health education costs as natural tobacco tar starting next year, which is expected to increase by 1001.2 billion won over the next five years.

 

The vape industry dilutes synthetic nicotine into e-liquid, and taxes and costs are collected from the final liquid. As a result, actual tax revenue is expected to be higher than expected. Kim Do-hwan, vice president of the Korea e-Cigarette Association, said: “Natural tobacco tar is generally a finished product, while one ton of synthetic nicotine can be made into about 90 tons of vape products.”

 

Under current regulations, vaping advertising does not need to be subject to the strict restrictions of traditional cigarettes, nor can it be prevented from being sold online. With 59 percent of synthetic nicotine coming from China, some in the industry point out that “as in the regulatory grey area, Chinese companies are raking it in”.

 

Currently, the National Assembly’s Finance and Planning Committee is deliberating an amendment to the Cigarette Business Law that would classify e-cigarettes as “cigarettes” and include them in the scope of regulation. However, with the Treasury saying its “toxicity and safety of synthetic nicotine have not been established” and opposing its inclusion in cigarettes, the amendment has not made substantial progress. For e-liquids, the lack of vigilance has led some to point to the need to issue a response strategy from a public health perspective.

 

According to a recent paper “Analysis of e-cigarette Use Behavior and Smoking Cessation Programs for Korean Adults” published by a research team at Keimyung Medical University, e-cigarette users who do not have a smoking cessation program are 1.8 times more likely to continue smoking than traditional cigarette users. “Synthetic nicotine should be included in the tax and regulatory framework, even if it is only for the sake of public health,” said Rep. Choi Hye-young.