Starting on June 1, 2023, the South African government will impose a consumption tax on nicotine alternatives products, including e-cigarettes, at a rate of R2.90/ml. The South African Vaping Association and British American Tobacco South Africa have expressed concern that this aggressive tax could push consumers towards the black market.
Taxation will harm the development of the industry.
South African Finance Minister Enoch Godongwana announced a new tax decision for the first time during his 2022 budget speech.
The South African Revenue Service (SARS) has announced that the consumption tax classification for tobacco products has been amended to include e-cigarettes and similar products.
The manufacturers of these products need to apply to the State Administration of Taxation (SARS) before June 1, 2023, and obtain a license for the production site of these products. They must also submit their consumption tax account before July 28, 2023.
In addition, warehouses storing electronic cigarettes are also required to apply for a permit.
The warehouses storing such products are also required to apply for licenses from the SARS before June 1st, 2023.
In February 2022, Asanda Gcoyi, the CEO of the Vapor Products Association of South Africa (Vpasa), stated that imposing a consumption tax on e-cigarettes would be detrimental to the industry.
He stated that the government has not fully assessed this policy.
It is reported that the sales of e-cigarettes in South Africa reached 1.5 billion Rand (equivalent to approximately 560 million RMB) in 2022, and the government imposes a consumption tax on the e-cigarette industry.
May result in a 22% decrease in sales.
British American Tobacco South Africa has stated that proposed taxes could cause prices of electronic cigarette products to increase by more than double.
According to Geco, the average price of electronic cigarette products may increase by 138%, while consumption of e-cigarette liquid is expected to decrease by 36%.
Both Gekoi and British American Tobacco believe that radical taxation will push consumers towards the illegal market.
There is currently no regulatory legislation.
Electronic cigarettes are not within the scope of South Africa's Tobacco Products Control Act or Medicines and Related Substances Control Act, and therefore are largely unregulated under South African law.
The "Tobacco Product and Electronic Delivery Systems Control Act,” which regulates electronic cigarettes, is currently in the process of being legislated and is under review.
Electronic cigarettes, which are seen as a replacement for traditional cigarettes, have gained popularity among many people. However, academics in South Africa are concerned about the issue of teenagers using electronic cigarettes.
A study conducted by Professor Richard van Zyl-Smit of the University of Cape Town (UCT) has revealed that more than 5,500 high school students in several schools in South Africa have a habit of using e-cigarettes.
A study has found that over 25% of students are using electronic cigarettes.
Furthermore, almost 30% of students reported using e-cigarettes within the first hour of waking up, with almost a quarter indicating they were addicted and unable to go a day without them.
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South Africa will introduce a new tax on tobacco products from next month. The tax will affect the prices of cigarettes and other tobacco products nationwide.
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