What that you must find out about proposed vape taxes for South Africa

Nationwide Treasury is asking for public remark by 7 February 2022 on its proposals to impose a particular excise tax on each the non-nicotine and nicotine options in e-cigarettes, notice Wesley Grimm, senior affiliate & Rudi Katzke, companion at regulation agency, Webber Wentzel.

Nationwide Treasury revealed a draft dialogue paper in December 2021 on the proposed taxation of digital nicotine supply techniques (ENDS) and digital non-nicotine supply techniques (ENNDS), generally often known as e-cigarettes.

In accordance with Nationwide Treasury, e-cigarettes are battery-powered gadgets that don’t burn or use tobacco leaves however vaporise e-liquid options {that a} consumer inhales.

In its dialogue paper, Nationwide Treasury acknowledges that there’s uncertainty in regards to the precise health-related dangers of e-cigarettes. Consequently, it needs to have interaction with stakeholders on its fiscal coverage suggestions for the taxation of e-cigarettes, as nations just like the Philippines, Kenya and Russia are doing.

Nationwide Treasury proposes to introduce a particular excise tax on each the non-nicotine and nicotine options utilized in e-cigarettes and intends to make use of its current coverage tips relevant to different excisable merchandise to take action.

For instance, conventional tobacco merchandise are topic to excise duties at a fee of 40% of the worth of the most well-liked model in every tobacco class. When utilized to e-cigarettes, customers may pay excise obligation starting from ZAR 33.60 to ZAR 346.00 per product, relying on the nicotine content material and dimension of that product.

The common excise fee for e-cigarettes is proposed at R2.91 per millilitre and apportioned in a ratio of 70:30 between nicotine and non-nicotine parts.

Basically, customers may pay R2.03 per millilitre of e-cigarette resolution containing nicotine and 87 cents per millilitre of e-cigarette resolution that accommodates no nicotine, if the draft proposals are accepted and turn into laws.

Merchandise with a better nicotine content material, it’s proposed, will appeal to a better fee of obligation in contrast with decrease nicotine merchandise.

Nationwide Treasury’s proposals to tax e-cigarette options that include no tobacco or nicotine could, specifically, be questioned by some stakeholders, because it doesn’t essentially assist the federal government’s acknowledged coverage intention of decreasing the consumption of tobacco merchandise. It additionally may stimulate the illicit commerce in e-cigarettes, as has occurred within the tobacco sector.

Additionally it is price noting that producers and importers who turn into accountable for the proposed excise taxes on e-cigarettes will want stringent certifications by accredited laboratories, which use both South African Nationwide Accreditation or Worldwide Laboratory Accreditation Co-operation (ILAC) authorized methodologies.

The place such certifications usually are not obtainable, a penalty fee of obligation is being proposed, which is one other issue that affected stakeholders ought to scrutinise with care.

E-cigarette customers, producers and importers are inspired to fastidiously think about this complete draft dialogue doc and make related proposals to Nationwide Treasury. Feedback on the draft dialogue doc are due by 7 February 2022.

  • By Wesley Grimm, senior affiliate & Rudi Katzke, companion at regulation agency, Webber Wentzel

Learn: New vaping guidelines and taxes deliberate for South Africa