Indonesian E-Cigarette Association Expresses Discontent with New Taxes

According to a report by DDTCNews on January 8th, the Indonesian e-cigarette association (APVI) has expressed deep dissatisfaction with the new e-cigarette taxes set to be implemented in January 2024. The association believes that these new taxes will deliver a severe blow to the e-cigarette industry.

Garindra Kartasasmita, the secretary-general of the association, stated that apart from the increase in e-cigarette taxes and wholesale prices in 2024, the value-added tax (PPNHT) for tobacco products will also increase in 2025. He expressed protest against this "triple blow." Although they are willing to pay e-cigarette taxes, they hope that this increase can be implemented in stages.

According to Galindra, the issue of e-cigarette tax and wholesale price increase was determined by the end of 2022, but the specific e-cigarette tax standard was only known after a tax bureau seminar on November 28, 2023. He pointed out that the association expressed opposition at the seminar and had a meeting with the Directorate General of Budget Allocation at the Indonesian Ministry of Finance, reaching an agreement to postpone the implementation of the new tax until 2026.

Gallindra expressed doubts about the effectiveness of e-cigarette taxes. He believes that although e-cigarettes differ from traditional cigarettes, they are incorrectly classified as tobacco products under the regulations. He anticipates that the implementation of e-cigarette taxes will result in a price increase of 10% to 15%, but the actual extent of the price increase will depend on the specific decisions made by tobacco manufacturers.

In the face of this, Lidyawati Christian, the Director of the Directorate General of Budget Allocation of the Ministry of Finance of Indonesia, remains steadfast and emphasizes that the tobacco tax is not a new initiative, as it was already established in the Resource Tax and Local Fine Law (PDRD) in 2009. She emphasizes that the tobacco tax should be accompanied by tobacco standards, as it was already determined in the 2009 legislation, but has not yet been implemented for e-cigarettes.

Lydia pointed out that the tobacco tax, as an additional tax accompanying the goods, needs to be implemented, so she believes that imposing this tax on e-cigarettes is fair. Lydia also reminded the association that if there are any objections to the tax system, they can submit a request for judicial review to the Indonesian Constitutional Court.