The Indonesian vape Association opposes the new tax and expects a 10-15% increase

The Indonesian E-cigarette Association has opposed the tax regulation on vapes in 2024, warning that prices could rise by 15%, stressing that it wants to increase the tax in stages. The Indonesian Finance Ministry stressed that tobacco taxes should accompany tobacco standards, saying e-cigarettes are taxed fairly and reminding the association to file a request for judicial review.

 

According to a report by DDTCNews on January 8, the Indonesian Vaping Association (APVI) is very unhappy with the new tax on vapes that will be implemented in January 2024. The association believes that the new e-cigarette tax is equivalent to a slap in the face for the e-cigarette industry.

 

Garindra Gasas, Secretary General of the Association, said that in addition to e-cigarette taxes and wholesale price increases in 2024, the value-added tax on tobacco goods (PPNHT) will also increase in 2025. He noted that he protested against this “triple whammy.” While they are willing to pay an e-cigarette tax, they want this improvement to happen in stages.

 

According to Galindra, the rise in e-cigarette taxes and wholesale prices at the end of 2022 was clear, but it was not until a lecture by the Tax Bureau on November 28, 2023, that the specific tax standards for e-cigarettes were known. He noted that the association had objected to lectures. In response, they held a meeting with the Indonesian Ministry of Finance’s General Appropriations Directorate and reached an agreement to postpone the effectiveness of the new tax until 2026.

 

Galindra expressed doubts about the effectiveness of an e-cigarette tax. He believes that although vaping is different from traditional tobacco, e-cigarette taxes are treated as cigarette products in laws and regulations, which is a wrong analysis. He predicted that the implementation of the e-cigarette tax would increase the price of e-cigarettes by 10 to 15 percent, but the final price increase still depends on the actual decision of smokers.

 

In the face of this, Lidia Kurniawati Christian, director of the Department of Local Taxation and Local Fines (DJPK) in the General Appropriation Department of the Indonesian Ministry of Finance, was uncompromising, stressing that tobacco taxes are nothing new. Since the Resource Tax and Local Fines Act of 2009 are confirmed in the (PDRD). She stressed that tobacco taxes should be accompanied by cigarette standards, as this was determined in the 2009 bill, but e-cigarettes have not yet been implemented.

 

Lidia pointed out that the tobacco tax needs to be implemented as an additional tax on accompanying products, so she believes the e-cigarette tax is fair. Lidia also reminded the association that if there is an objection to the tax system, it can file a judicial review and make a request to the Indonesian Constitutional Court.