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.

Russia's State Duma Passes Tobacco and Nicotine Ingredient Disclosure Bill, Targeting 2027 End to Trade-Secret Protection for Certain Harmful Ingredient Data
Russia's State Duma Passes Tobacco and Nicotine Ingredient Disclosure Bill, Targeting 2027 End to Trade-Secret Protection for Certain Harmful Ingredient Data
Russia's State Duma passed a government-sponsored amendment on November 11, 2026, by 414 votes to none, seeking to prevent businesses from classifying information on the presence and number of types of certain harmful ingredients in tobacco and nicotine-containing products as trade secrets. The measure covers ingredients capable of increasing nicotine dependence or exhibiting toxic, carcinogenic, mutagenic or reproductive toxicity, including substances that acquire such properties during heating or smoldering. Bill No. 1286415-8 would amend Article 5 of Federal Law No. 98-FZ on Commercial Secrets and is scheduled to take effect on January 1, 2027. The bill has cleared all three readings in the State Duma but has not completed the remaining legislative procedures.
Regulations
Nov.12 by 2Firsts Perspectives
AIR Q3 Sales Rise 11%, but New Products Generate Just $2.1 Million in Nine Months as U.S. Vape Push Awaits FDA Review
AIR Q3 Sales Rise 11%, but New Products Generate Just $2.1 Million in Nine Months as U.S. Vape Push Awaits FDA Review
AIR Global PLC (NASDAQ: AIIR), a producer of flavored shisha tobacco and next-generation nicotine products, reported an 11.1% increase in third-quarter 2026 revenue to $99.8 million and a 7.7% rise in adjusted EBITDA to $30.9 million. Revenue for the first nine months increased 6.0% to $306.7 million, but the company posted a $74.2 million net loss, affected by listing-related expenses and other costs. Its New Growth Categories (NGC) business generated $2.1 million in nine-month revenue and an adjusted EBITDA loss of $10.8 million. AIR maintained its 2026 revenue growth guidance of 4%–6%, while lowering its capital expenditure outlook and raising its year-end leverage forecast from approximately 2.1 times to 2.5 times. The company has submitted a U.S. PMTA for its Crown Switch pod vape, with future contributions from new products dependent on regulatory progress and commercialization.
Capital Markets
Nov.13
Product | KUMI SCENIC 50K Offers Nicotine and 6-Methyl Nicotine Versions as 6-MN Products Appear in Multiple U.S. State Directories, With Louisiana Listing FDA Exemption
Product | KUMI SCENIC 50K Offers Nicotine and 6-Methyl Nicotine Versions as 6-MN Products Appear in Multiple U.S. State Directories, With Louisiana Listing FDA Exemption
An October 2026 review of U.S. state vapor product directories found KUMI 6 SCENIC 50K listed in Louisiana and Nebraska. Louisiana classifies 20 related product entries as “FDA EXEMPTION.” The SCENIC platform is marketed in both conventional nicotine-salt and NoNic6 formulations, each advertised with 22mL e-liquid capacity and up to 50,000 puffs. U.S. wholesaler Midwest Goods listed both versions in August 2025 with a suggested retail price of $19.99 each. The NoNic6 version is associated with 6-methylnicotine and is also marketed by some distributors as “nicotine-free.”
product
Oct.27
Indiana Halts Sales of Elf Bar, Lost Mary, MR FOG and iJOY Vapes Under Foreign-Adversary Rules; Some Products Return After Compliance Filings
Indiana Halts Sales of Elf Bar, Lost Mary, MR FOG and iJOY Vapes Under Foreign-Adversary Rules; Some Products Return After Compliance Filings
Indiana's Alcohol and Tobacco Commission (ATC) ordered tobacco certificate holders in September to remove certain vaping products marketed under Elf Bar, Lost Mary, MR FOG, iJOY and other brands from inventory under the state's foreign-adversary product law. The agency later listed 257 MR FOG products and 77 Lost Mary product entries as lawful for sale. The Lost Mary revision expressly stated that compliance evidence had been received for 20 additional products. 2Firsts compliance expert Kurt said potential filings could include e-liquid and ingredient-origin records, U.S. nicotine-analog supply-chain documentation and FDA premarket application status.
Regulations
Oct.08
On-Site Report | CTP Details PMTA Backlog, 180-Day Review Goal and sPMTA Process
On-Site Report | CTP Details PMTA Backlog, 180-Day Review Goal and sPMTA Process
FDA’s Center for Tobacco Products detailed new PMTA review data and process changes at the 2026 FDLI conference. Pending PMTAs fell from about 450,000 at the start of 2025 to 135,000 by September 2026. CTP also discussed its 180-day review goal, current sPMTA pilot, alternate-supplier planning, more than 50,300 pending SE reports, and lessons from the nicotine pouch pilot already being applied to ENDS review.
Regulations
Oct.07
Imperial Brands Sees Double-Digit NGP Growth as Sixth Year of Tobacco Revenue Gains Backs £1.5 Billion Buyback
Imperial Brands Sees Double-Digit NGP Growth as Sixth Year of Tobacco Revenue Gains Backs £1.5 Billion Buyback
Imperial Brands reaffirmed its FY26 guidance in its October 8 pre-close trading update, forecasting double-digit net revenue growth in next-generation products and share gains across heated tobacco, vape and modern oral. Tobacco net revenue is expected to grow at a low-single-digit rate, marking a sixth consecutive year of growth. The company has completed its £1.45 billion FY26 share repurchase and announced a £1.5 billion buyback for FY27. Group adjusted operating profit is expected to increase 3% to 5%, while free cash flow is forecast to exceed £2.2 billion.
Oct.09