Increasing Tax Evasion with Synthetic Nicotine in South Korea

Oct.20.2023
Increasing Tax Evasion with Synthetic Nicotine in South Korea
The South Korean government continues to battle tax evasion as synthetic nicotine use in e-cigarettes rises, resulting in losses of around 800 million Korean won.

According to a report from South Korean media outlet Naver on October 19th, the problem of using synthetic nicotine as natural nicotine to evade taxes is becoming increasingly serious. Within the past nine months, a total of approximately 800 million Korean won has been evaded in taxes.


According to data provided by Kim Young-joo, a member of the Health and Welfare Committee of the South Korean National Assembly, a total of 110 cases of tax evasion were discovered from November last year to July this year by falsely declaring natural nicotine as synthetic nicotine. The scale of domestic tax losses amounted to 870 million Korean won.


E-cigarette liquid, which is made from natural nicotine extracted from tobacco leaves, falls under the "cigarette" category according to tax laws. Each milliliter of this liquid is subject to a domestic tax of 1,799 Korean won imposed on manufacturers. However, synthetic nicotine liquid, which is prepared using chemical substances, is classified as an "industrial product" under tax laws and is not subject to any taxes. This discrepancy in tax treatment has led numerous manufacturers to use synthetic nicotine in order to evade taxes. Last year, the total value of imported e-cigarettes using synthetic nicotine liquid amounted to approximately 9.9 billion Korean won, yet no domestic taxes were collected on these imports.


In addition, the import volume of synthetic nicotine liquid used in e-cigarettes has been steadily increasing. In 2020, it was 56 tons, and it rose to 119 tons last year, more than doubling. It is expected that the import volume for the first half of this year will reach 91 tons, which is expected to exceed 180 tons by the end of the year. Especially for e-cigarettes that use synthetic nicotine liquid, they are not considered cigarettes under current laws, so they can be sold in physical stores without being subject to various restrictions such as warning labels. This has been criticized for accelerating the increase in smokers.


Member of Parliament Kim Young-Joo emphasized the need to revise laws to impose equal taxes on synthetic nicotine and natural nicotine e-cigarettes, as the current lack of definition for synthetic nicotine has resulted in various drawbacks. He also urged for measures to be taken to prohibit online marketing tactics targeting minors, which are being employed by certain e-cigarette manufacturers.


We welcome news tips, article submissions, interview requests, or comments on this piece.

Please contact us at info@2firsts.com, or reach out to Alan Zhao, CEO of 2Firsts, on LinkedIn


Notice

1.  This article is intended solely for professional research purposes related to industry, technology, and policy. Any references to brands or products are made purely for objective description and do not constitute any form of endorsement, recommendation, or promotion by 2Firsts.

2.  The use of nicotine-containing products — including, but not limited to, cigarettes, e-cigarettes, nicotine pouchand heated tobacco products — carries significant health risks. Users are responsible for complying with all applicable laws and regulations in their respective jurisdictions.

3.  This article is not intended to serve as the basis for any investment decisions or financial advice. 2Firsts assumes no direct or indirect liability for any inaccuracies or errors in the content.

4.  Access to this article is strictly prohibited for individuals below the legal age in their jurisdiction.

 

Copyright

 

This article is either an original work created by 2Firsts or a reproduction from third-party sources with proper attribution. All copyrights and usage rights belong to 2Firsts or the original content provider. Unauthorized reproduction, distribution, or any other form of unauthorized use by any individual or organization is strictly prohibited. Violators will be held legally accountable.

For copyright-related inquiries, please contact: info@2firsts.com

 

AI Assistance Disclaimer

 

This article may have been enhanced using AI tools to improve translation and editorial efficiency. However, due to technical limitations, inaccuracies may occur. Readers are encouraged to refer to the cited sources for the most accurate information.

We welcome any corrections or feedback. Please contact us at: info@2firsts.com

Photo Gallery | A Sneak Peek at the World Vape Show: What Products Are Major Brands Betting On?
Photo Gallery | A Sneak Peek at the World Vape Show: What Products Are Major Brands Betting On?
The World Vape Show will take place in Dubai from June 18 to 20. Ahead of the event, several brands have shared teasers of new products and technologies online. 2Firsts has compiled a selection of these previews for readers.
Jun.12 by 2FIRSTS.ai
Davidoff's 2024 Revenue Increases by 0.9% to CHF 541.7 Million, Cuts Production Strategically in Response to EU Regulations
Davidoff's 2024 Revenue Increases by 0.9% to CHF 541.7 Million, Cuts Production Strategically in Response to EU Regulations
Oettinger Davidoff AG's global revenue reached CHF 541.7 million ($700 million) in 2024, a 0.9% increase. The company reduced production by 21% to 38.5 million cigars in response to new EU traceability regulations. Flagship brands Davidoff and Zino grew by 15% and 28.1%, respectively, while the Honduras factory is expanding capacity.
Jun.23 by 2FIRSTS.ai
PMI Urges Africa to Remove Tobacco Control Barriers, Calls for Science-Driven Policy
PMI Urges Africa to Remove Tobacco Control Barriers, Calls for Science-Driven Policy
At the 2025 Innovation Conference in Cape Town, Philip Morris International (PMI) urged African countries to remove barriers to tobacco harm reduction. It cited inefficient policies, resistance to innovation, and poor communication as key challenges, and called for science-based regulations to provide adult smokers with better alternatives.
Jun.17 by 2FIRSTS.ai
Australian Government-Funded Vaping Education Program Featured in The Lancet: Student Vaping Rates Drop by 65%
Australian Government-Funded Vaping Education Program Featured in The Lancet: Student Vaping Rates Drop by 65%
Australia’s “OurFutures” vaping education program cut student vaping rates by 65% after 12 months, according to a trial of 5,000 students across 40 schools. Published in The Lancet, it is the first proven effective school-based e-health intervention in Australia. The program will be expanded through 2028, with long-term data expected in 2026.
Jul.29 by 2FIRSTS.ai
Russia to Include E-Cigarettes in Mandatory Labeling Pilot from July 14, Managed via the “Honest Sign” System
Russia to Include E-Cigarettes in Mandatory Labeling Pilot from July 14, Managed via the “Honest Sign” System
The Russian government is expanding its product labeling pilot to include e-cigarettes, adding them to the list of goods requiring labels. The pilot will run from July 14, 2025, to February 28, 2026, allowing market participants to voluntarily apply free QR codes to products that meet specific codes.
Jul.11 by 2FIRSTS.ai
Australia's New Vaping Law Leads to the Collapse of the Legal Market and a Surge in Black - market Transactions
Australia's New Vaping Law Leads to the Collapse of the Legal Market and a Surge in Black - market Transactions
Australia’s new vaping law has led to the collapse of the legal market and a surge in black - market transactions. The new regulations, which limit sales to pharmacies, have seen low participation and transaction volumes in the legal market, while black - market dealings have soared. Critics say the policy has fueled organized crime, and experts are calling for legalization and regulation to address the crisis.
Jun.23 by 2FIRSTS.ai