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.

Product | FOGER Introduces Switch Pro 30K Nixodine Pod in U.S. Retail, Bringing 6-MN Related Formulation to High-Capacity Pod Platform
Product | FOGER Introduces Switch Pro 30K Nixodine Pod in U.S. Retail, Bringing 6-MN Related Formulation to High-Capacity Pod Platform
FOGER has introduced the Switch Pro 30K Nixodine Pod in U.S. retail channels, bringing a 6-methylnicotine (6-MN)-related formulation into its reusable Switch Pro 30K pod ecosystem. The product retains the existing reusable dock and magnetic replacement pod architecture, featuring a 19ml prefilled pod, dual-mesh heating and Normal/Boost modes. The Nixodine version is labeled nicotine-free in terms of conventional nicotine but uses a 5% Nixodine-related formulation. The product has appeared in U.S. retail and wholesale channels, with some listings indicating Kentucky-only availability.
Aug.28
From a 2017 Launch to 48% of South Korea’s Heated Tobacco Market, KT&G Looks Back on a Decade of lil
From a 2017 Launch to 48% of South Korea’s Heated Tobacco Market, KT&G Looks Back on a Decade of lil
KT&G announced on Aug. 13, 2026, that it has opened “lil Archive,” a brand exhibition space in Seoul showcasing the evolution, technology platforms and future direction of its heated tobacco brand lil since its launch in 2017. KT&G said lil now spans three major platforms — lil SOLID, lil HYBRID and lil AIBLE — with more than 30 dedicated consumables, and held a 48% share of South Korea's heated tobacco market in the second quarter of 2026. The opening comes as lil enters its 10th year, with KT&G continuing to position the brand for expansion beyond its domestic market.
Aug.14
UK Reform Party Proposes Cap of 1,000 Vape Shops Under Plan to Tighten Retail Controls
UK Reform Party Proposes Cap of 1,000 Vape Shops Under Plan to Tighten Retail Controls
The UK Reform Party has proposed limiting the number of dedicated vape shops in the country to around 1,000 as part of a plan to tighten oversight of vape retail channels. The proposal was put forward by Reform UK deputy leader and MP Lee Anderson. The plan remains a political proposal and has not become UK government policy, with no detailed legislation, implementation timeline or allocation rules announced.
Aug.10
Ispire Q4 Revenue Rebounds 33% but Full-Year Sales Still Fall 25% as FY2027 Focus Shifts to Malaysia Manufacturing, ODM, Nicotine Pouches and Age Verification
Ispire Q4 Revenue Rebounds 33% but Full-Year Sales Still Fall 25% as FY2027 Focus Shifts to Malaysia Manufacturing, ODM, Nicotine Pouches and Age Verification
Ispire Technology reported FY2026 revenue of about $96 million, down 24.7% year over year, as U.S. cannabis-vapor hardware and European e-cigarette sales declined by $17.4 million and $12.7 million, respectively. Fourth-quarter revenue rose 32.5% to $26.7 million, while quarterly gross margin fell to 6.3%. For FY2027, the company is prioritizing Malaysia manufacturing and vapor ODM while continuing to develop nicotine pouches, IKE Tech age-verification technology and G-Mesh licensing. Ispire has not separately disclosed the revenue or profit contribution of those newer businesses.
Regulations
Sep.17 by 2Firsts Perspectives
Australia’s TGA Places Nicotine Pouches Under Therapeutic Goods Rules From July 24, Blocking Imports of Unapproved Products
Australia’s TGA Places Nicotine Pouches Under Therapeutic Goods Rules From July 24, Blocking Imports of Unapproved Products
Australia is strengthening controls on nicotine pouches under its existing therapeutic goods regulatory framework. According to the Therapeutic Goods Administration (TGA), nicotine pouch products must meet regulatory requirements, and unapproved products cannot be legally imported. The move follows Australia’s broader approach of maintaining strict oversight of nicotine products, including nicotine-containing vapes. As nicotine pouches expand globally, Australia’s regulatory approach highlights growing differences in how countries manage emerging smoke-free nicotine products.
Regulations
Jul.27
Charlie’s Says 30 PACHA Vape SKUs Tentatively Identified for FDA’s Non-Priority Enforcement Public List
Charlie’s Says 30 PACHA Vape SKUs Tentatively Identified for FDA’s Non-Priority Enforcement Public List
Charlie’s Holdings said the U.S. Food and Drug Administration notified the company on June 23, 2026, that 30 PACHA vape SKUs with submitted PMTAs had been tentatively identified for inclusion on a planned public-facing FDA webpage. Under enforcement guidance issued by FDA in May, the webpage is intended to identify certain unauthorized products for which the agency generally does not intend to prioritize enforcement of premarket authorization requirements. Charlie’s disclosed the development alongside second-quarter revenue of $3.8 million, up 116% year over year.
Aug.25