South Korea abandons tax hike on heated tobacco products

Apr.20.2023
South Korea abandons tax hike on heated tobacco products
South Korea abandons tax increase on heated tobacco products after facing public opposition.

On April 17th, during a meeting in the South Korean National Assembly, the ruling party proposed implementing cigarette-like taxes on heated tobacco products. Two days after the South Korean Finance Minister hinted at a potential parliamentary hearing, on April 19th, the government abandoned its decision to tax heated tobacco products.


In a statement, the Ministry of Finance said, "The government has not currently considered raising tobacco taxes." Previously, the minister's remarks faced strong public opposition.


South Korea's cigarette tax is higher than that of HNB products.


In South Korea, the tax rate for regular cigarettes is higher than the tax rate for HNB pods because the government deems the former more harmful to health.


Each pack of cigarettes is subject to a tax of 3,323 Korean won (equivalent to 17.23 Chinese yuan), which includes:


The tobacco consumption tax is 1007 South Korean won (equivalent to 5.22 Chinese yuan), the education tax is 443 South Korean won (equivalent to 2.29 Chinese yuan), the consumption tax is 594 South Korean won (equivalent to 3.08 Chinese yuan), the value-added tax is 409 South Korean won (equivalent to 2.12 Chinese yuan), the health promotion fee is 841 South Korean won (equivalent to 4.36 Chinese yuan), the waste fee is 24.4 South Korean won (equivalent to 0.12 Chinese yuan), and 5 South Korean won is used to support tobacco farmers (equivalent to 0.026 Chinese yuan).


On the other hand, taxes of 3,004 Korean won (equivalent to 15.63 yuan) are imposed on HNB pods at a tax rate of 90.4% of the standard cigarette product tax rate.


The average price for regular tobacco products and HNB pods is around 4,500 South Korean won (approximately 23.34 Chinese yuan) per unit of consumption.


Cigarette tax reduced, while non-combustible tobacco products taxed increased.


The government's attempt to increase tax rates to boost tax revenue has resulted in public criticism. Data from South Korea's Ministry of Finance show that tax revenue in January and February this year amounted to KRW 54.2 trillion (approximately RMB 282 billion), a decrease of KRW 15.7 trillion (approximately RMB 81.7 billion) compared to the same period last year.


In the past few years, the taxes on tobacco products have also decreased. This is mainly because the sales of regular tobacco products have decreased, rather than an increase in sales of non-combustible tobacco products, which have replaced traditional cigarettes with higher tax rates.


Between 2020 and 2022, the number of tobacco products sold in South Korea increased from 3.59 billion to 3.63 billion, an increase of 1.1%. However, the total tax revenue from all tobacco products decreased from KRW 120 trillion to KRW 118 trillion.


From 2020 to 2022, the sales volume of non-combustible pods increased from 380 million to 540 million, while cigarette sales decreased from 3.2 billion to 3.09 billion packs.


Industry observers have pointed out that the government is unlikely to increase taxes on HNB products, particularly before the general election in April next year.


Related reading:


The price of Korean heating non-burning equipment is twice that of Japan.


South Korea's customs officials have seized counterfeit duty-free electronic cigarettes and e-cigarette liquid, with the estimated amount of tax evasion reaching 500 million South Korean won.


The purchasing managers' index (PMI) for the South Korean market has seen a 163% growth in operating profits, while BAT (presumably referring to the trio of Chinese tech giants Baidu, Alibaba, and Tencent) has experienced a 12% decline.


ELFBAR's Korean distributor has seen an increase in initial orders, with a target of selling 2 million units in South Korea this year.


Reference:


South Korea has retreated from a potential tax increase on heated tobacco products.



Disclaimer

This article is provided solely for professional research, industry discussion, and informational purposes. Any references to brands, companies, products, technologies, or policies are made for factual reporting and analytical purposes only, and do not constitute endorsement, recommendation, promotion, or advertising by 2Firsts.

Nicotine-containing products, including but not limited to cigarettes, e-cigarettes, heated tobacco products, and nicotine pouches, carry significant health risks. Readers are responsible for complying with all applicable laws and regulations in their respective jurisdictions, including age restrictions and access limitations.

The information contained in this article should not be regarded as investment, legal, medical, regulatory, or commercial advice. While 2Firsts strives to ensure the accuracy and reliability of its content, it does not assume liability for any direct or indirect loss arising from errors, omissions, inaccuracies, or reliance on the information contained herein.

This article is not intended for individuals below the legal age for accessing tobacco or nicotine-related information in their jurisdiction.

 

Copyright Notice

This article is either original content produced by 2Firsts or content reproduced, translated, summarized, or adapted from third-party sources with attribution where applicable. The intellectual property rights of the original content remain with 2Firsts or the respective original rights holders.

No individual or organization may copy, reproduce, distribute, republish, modify, translate, or otherwise use this content without prior authorization. Any unauthorized use may result in legal action.

For copyright-related inquiries, corrections, or removal requests, please contact: info@2firsts.com.

 

AI-Assisted Translation and Editing Notice

Portions of this article may have been translated, edited, or reviewed with the assistance of artificial intelligence tools to improve efficiency and readability. Due to the limitations of AI-assisted translation and editing, discrepancies, omissions, or inaccuracies may exist when compared with the original source.

Where applicable, readers are advised to refer to the original source for the most complete and accurate information. If you identify any errors or believe that any content infringes upon your rights, please contact us at info@2firsts.com, and we will review and address the matter promptly.

Iowa Enforces Vape Registry Law as Retailers Warn Product Limits Could Increase Store Pressure
Iowa Enforces Vape Registry Law as Retailers Warn Product Limits Could Increase Store Pressure
Iowa has begun enforcing its vape registry law, requiring vape products to be registered before they can be legally sold in the state. The move follows a decision by the U.S. Court of Appeals for the Eighth Circuit to lift an injunction that had blocked enforcement. Retailers have warned that tighter product availability rules could increase pressure on vape shops. One Iowa retailer said that if only a limited number of products remain available, many stores could face significant business challenges.
Aug.06
South Korea Fully Reviews Nicotine-Analog and Nicotine-Free Vape Liquid Imports, With Over 99% From China and Chinese Supply-Chain Documents Under Scrutiny
South Korea Fully Reviews Nicotine-Analog and Nicotine-Free Vape Liquid Imports, With Over 99% From China and Chinese Supply-Chain Documents Under Scrutiny
Korea Customs Service has tightened import controls on nicotine-analog and nicotine-free e-cigarette liquids, placing the products under 100% document review and subjecting all e-cigarette liquid import declarations to pre-clearance ingredient analysis. As of September 20, 2026, South Korea had imported about 15 metric tons of nicotine-analog liquids, 99.99% from China, and about 316 metric tons of nicotine-free liquids, including roughly 315 metric tons, or 99.7%, from China. The measures follow South Korea's April expansion of its tobacco definition to include synthetic nicotine products and include new checks on Chinese manufacturing, transaction and export documentation.
Sep.24
NAS 2026 | Former FDA Tobacco Chief Mitch Zeller Calls for Shift From “End Game” to “End State”
NAS 2026 | Former FDA Tobacco Chief Mitch Zeller Calls for Shift From “End Game” to “End State”
At the 2026 New Approaches Summit in New York, former FDA Center for Tobacco Products Director Mitch Zeller called for the tobacco harm reduction debate to shift from the traditional “end game” toward defining a desired “end state.” He also highlighted unresolved concerns around dual use, argued that biomarkers of exposure may be more meaningful than cigarettes-per-day in assessing risk reduction, and said nicotine misperceptions remain a major barrier to public health progress.
Sep.25
Earnings Analysis | CTIHK H1 2026 Revenue Falls 26.9% as Core Businesses Diverge and New Growth Drivers Remain to Be Proven
Earnings Analysis | CTIHK H1 2026 Revenue Falls 26.9% as Core Businesses Diverge and New Growth Drivers Remain to Be Proven
China Tobacco International (HK) reported a 26.9% revenue decline in H1 2026, while gross profit fell only 9.5%, revealing sharp divergence across its businesses. Tobacco leaf imports contracted, while leaf exports and Brazil operations expanded strongly. Cigarette exports faced China duty-free market transition, and new tobacco products remained small. Meanwhile, CTIHK continues to strengthen its role as an investment and financing platform, though major external deals have yet to emerge. 2Firsts examines what these shifts mean for its next growth drivers.
Capital Markets
Aug.24
Zhang Xiaotang Appointed Deputy Director of China’s Tobacco Regulator, Adding Another Finance-Background Official to Top Leadership
Zhang Xiaotang Appointed Deputy Director of China’s Tobacco Regulator, Adding Another Finance-Background Official to Top Leadership
China’s State Council has appointed Zhang Xiaotang as deputy director of the State Tobacco Monopoly Administration, with the regulator’s official website now listing him as a Party leadership group member and deputy director. Zhang previously led Hebei China Tobacco and earlier headed the STMA’s finance and audit department. His appointment follows the elevation earlier this year of former tax official Yao Laiying to head the STMA, adding another senior official with a strong fiscal or financial-management background to China Tobacco’s top leadership in 2026.
News
Sep.20
BAT New Categories Revenue Rises 18% in H1 2026 as Broad Portfolio Offers More Ways to Win—and Lose
BAT New Categories Revenue Rises 18% in H1 2026 as Broad Portfolio Offers More Ways to Win—and Lose
British American Tobacco’s New Category revenue rose 18% at constant rates in the first half of 2026. Nicotine-pouch brand Velo expanded rapidly, while Vuse recovered as U.S. enforcement against illicit e-vapor products strengthened. Heated-tobacco platform glo remained under pressure, and cigarettes continued to provide most of the group’s profit and cash. Compared with PMI and JT, BAT has more routes to growth—but also greater regulatory, investment and execution risks across its broader portfolio.
BAT
Jul.30