Colombia Proposes Excise Tax on E-Cigarettes, Projected to Raise Over $100 Million in First Year

Key points:

·Tax rates will be tiered: a 20% tax on the value added, with some nicotine products reaching 28%, and the tax on traditional cigarettes is proposed to increase from 10% to 15%, along with a progressive tax rate. 

·Complementary measures include adjusting the tax amount according to the consumer price index, implementing labeling and control measures to combat the black market, and using funds to strengthen the healthcare systems in each province. 

·The timeline predicts that the proposal will enter the House of Representatives for deliberation in August 2025, with the first-year revenue target exceeding 390 billion pesos (approximately $100 million).

[2Firsts news flash] According to a report by Infobae on July 31, conservative Colombian lawmaker Wadith Manzur recently submitted a bill aimed at expanding the current consumption tax on traditional cigarettes and tobacco to include e-cigarettes.

Assemblyman Mansour emphasized that the additional tax revenue will be used to strengthen the public health systems in each province. He pointed out that the main goal of this initiative is to limit public, especially young people's exposure to these harmful products, in order to protect them from nicotine addiction and long-term health risks.

The bill proposes that the consumption tax on e-cigarettes will be similar to traditional cigarettes, with plans to levy two types of taxes. The first tax is 1,000 Colombian pesos (approximately $0.25) per milliliter of e-liquid and 1,000 pesos per gram of oral nicotine products. The second tax is an ad valorem tax, which will be 20% of the selling price for e-cigarettes and smokeless tobacco products.

Mansur stated that tax rates will be adjusted annually based on the Consumer Price Index (IPC), and different progressive tax rates will be set depending on the nicotine content. Additionally, the bill includes increased labeling and control measures for the related products to prevent tax evasion and smuggling.

The bill will also impose a 10% tax on devices used for other equipment, such as hookahs and similar devices.

Mansour believes that the new policy will bring in over 390 billion pesos (approximately $100 million) in revenue for the national budget in its first year of implementation, with expectations to increase to 502 billion pesos (approximately $120 million) the following year. The project is anticipated to enter the deliberation phase in the House of Representatives in August 2025.