Key points:
·Tax plan: Ireland plans to impose taxes on e-cigarettes, including 0.5 euros per milliliter of e-liquid, as well as specific taxes on pods and disposable e-cigarettes, expected to raise 17 million euros, with implementation delayed until early 2026.
·Industry response: The owner of Vuse e-cigarette devices, British American Tobacco Ireland, supports the new taxes but emphasizes the need for strict enforcement.
·Market situation: The legal e-liquid market is worth around 550 million euros, with the illegal market accounting for over a third, valued at approximately 220 million euros.
·Enforcement controversy: The Irish Health Service Executive has been criticized for inadequate inspections, with calls from the industry to strengthen regulation and establish mechanisms to track the illegal market.
·Potential risks: Flavor restrictions or ineffective enforcement could lead to increased demand for illegal e-cigarettes, making Ireland a target for smuggling.
【2Firsts News Flash】According to a report by The Journal on July 29, British American Tobacco Ireland, owners of Vuse e-cigarette devices, support the Irish government's plan to introduce new taxes on e-cigarettes.
British American Tobacco Ireland has stated that unless a tax on e-cigarette consumption is implemented in the next few months, along with strong enforcement measures, the illegal e-cigarette market will continue to thrive.
In 2024, the government announced that it will double the price of e-cigarette refill pods, impose a 5 Euro tax on such products, and levy a 1 Euro tax on disposable e-cigarettes.
Ireland will impose a tax on e-liquid as part of the e-cigarette consumption tax, with a rate of 0.5 euros per milliliter.
This tax was originally scheduled to be implemented in mid-2025, but is currently facing difficulties and the specific implementation date has not been determined yet. It is expected that the tax will be imposed at the beginning of 2026.
Earlier this month, the tax strategy group under the Ministry of Finance stated that these additional taxes are estimated to raise 17 million euros.
The report from the tax strategy group referenced a report from KPMG, which found that the legal e-liquid market in Ireland is worth approximately 5.5 billion euros, with the illegal market estimated to be around 2.2 billion euros.
A report by KPMG estimated that over one-third of e-cigarettes sold in Ireland are illegal.
British American Tobacco Ireland company stated in a press release that, if implemented properly, e-cigarette taxes will "significantly improve market monitoring and control, curb illegal trade, protect consumers, and support responsible retailers.
David Melinn, National Manager of British American Tobacco Ireland, stated that he "fully supports" the new consumption tax but believes that it must be accompanied by clear and credible enforcement measures.
Merlin said:
“If implemented properly, this tax can help achieve the public policy goals, but without strong enforcement, there is a real risk that it could inadvertently fuel illegal trade.”
He stated that e-cigarette taxes will help keep the market under the supervision of the tax department, but without proper enforcement, illegal trade will increase.
Merlin also stated that before the implementation of this tax, the government "could not ascertain the magnitude of the illegal market.
The annual goal of the Health Service Executive in Ireland is to conduct 40 inspections of e-cigarette manufacturers, importers, and distributors.
However, Merlin stated,
“Given the size of the market and the severity of the illegal issues, this is insufficient.”
He called on the government to "introduce a structured mechanism to track and measure the scale of the illegal e-cigarette market".
Merlin stated:
“E-cigarette tax must be accompanied by additional market control measures, including retail permits and increased inspections, otherwise, the only winners of this budget measure will be criminals.”
He added that the restrictions on e-cigarette flavors imposed by the Nicotine Inhaling Products Act may lead to "an increased demand for illegal e-cigarettes, as users who rely on flavors will seek to purchase their e-liquid from elsewhere.
Merlin said:
“With the introduction of the new consumption tax and the possible implementation of a ban on e-cigarette flavors, it is crucial to strengthen emergency enforcement measures through inspections by the tax department and the Health Service Executive. Otherwise, Ireland could become a more favored target for illegal smugglers.”
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