China's New E-Cigarette Tax Announcement (Translation)

Ministry of Finance of People’s Republic of China

General Administration of Customs and General Administration of Taxation: Announcement No. 33 of 2022

In order to improve the consumption tax system, maintain a fair and uniform tax system, and better play the role of consumption tax to guide healthy consumption, the following announcement is made on matters related to the application of consumption tax on electronic cigarettes. 

I. About tax items and tax objects 

Electronic cigarettes will be included in the scope of the consumption tax levy and created as an additional category in the cigarette tax subheadings. 

Electronic cigarettes are electronic transmission systems used to produce aerosols for vaping, including electronic cigarette cartridges, vaping devices and electronic cigarette products sold in combination with electronic cigarette devices. An electronic cigarette cartridge is an electronic cigarette component containing vapor substances. An electronic cigarette device refers to an electronic device that vaprizes the vapor substances into an inhalable aerosol. 

Electronic cigarette import and export tariff numbers and trade names are listed in the annex. 

II. About the taxpayer 

The consumption tax taxpayers refer to the production (import), wholesaler and individuals in the People's Republic of China.

Electronic cigarette production taxpayers are enterprises that have obtained a license as a tobacco monopoly manufacturer and have obtained or are licensed to use the registered trademarks of others (hereinafter referred to as holding trademarks) for electronic cigarette products. If the electronic cigarette is produced by proxy production, the enterprise holding the trademark shall pay a consumption tax. Electronic cigarette wholesale taxpayers are enterprises that obtain a tobacco monopoly wholesale enterprise license and operate electronic cigarette wholesale businesses. Electronic cigarette import taxpayers are the individuals and entities that import electronic cigarettes. 

III. About the applicable tax rate 

Electronic cigarettes adopt the ad valorem method of calculating tax. The tax rate for production (import) is 36%, and the tax rate for wholesale is 11%.

IV. About the taxable price 

Taxpayers producing and wholesaling electronic cigarettes, the calculation of tax is in accordance with the sales from production and wholesale tax bracket respectively. Electronic cigarette production taxpayers selling through an agency shall calculate according to the sales price to distributors (agents) to calculate tax. If the taxpayer imports electronic cigarettes, the tax is calculated by totalling taxable components.

If the electronic cigarette production taxpayers are also proxy production, the sales of trademarked electronic cigarettes and sales of processed electronic cigarettes shall be accounted for separately; If not accounted for separately, the consumption tax is paid together.

V. About import and export policy 

Taxpayers exporting electronic cigarettes, is applicable for export tax rebate (exemption) policy. 

Electronic cigarettes will be added to the list of imported goods not exempt from taxation and taxed according to the rules at the border. 

In addition to the above provisions, individuals carrying or sending electronic cigarettes into the excise tax levy, in accordance with the relevant provisions of the State Council. Other matters of consumption tax on electronic cigarettes shall be carried out in accordance with the Provisional Regulations of the People's Republic of China on Consumption Tax and the Rules for the Implementation of the Provisional Regulations of the People's Republic of China on Consumption Tax. 

This announcement shall be implemented as of November 1, 2022. 

　　This announcement is hereby made. 

Annex: Electronic cigarette import and export tariff list and commodity name 

Ministry of Finance 

General Administration of Customs 

General Administration of Taxation

                                                                                                                                                               October 2, 2022