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.

R.J. Reynolds Vapor Company Launches Flavored Vuse Pro Pods in U.S. Without FDA Marketing Authorization
R.J. Reynolds Vapor Company Launches Flavored Vuse Pro Pods in U.S. Without FDA Marketing Authorization
R.J. Reynolds Vapor Company has begun selling four flavored Vuse Pro pods — Peach, Berry, Watermelon and Fresh Mint — in Ohio and selected other U.S. markets. According to the Vuse U.S. FAQ, Vuse Pro contains approximately 5.0% nicotine by weight, and Vuse Pro pre-filled pods are intended for use with Vuse Alto devices. Reynolds told 2Firsts that product labeling lists an e-liquid capacity of 2.0 mL per pod. The Vuse Alto Power Unit received FDA marketing authorization in 2024, while the new Vuse Pro pods themselves have not received marketing granted orders. The rollout follows the FDA’s May 2026 revision of enforcement priorities for certain unauthorized vaping products with qualifying pending applications.
BAT
Sep.10
FDA Revises Import Alert 98-07 Rules, Bringing May Enforcement Priorities Into Unauthorized ENDS Detentions
FDA Revises Import Alert 98-07 Rules, Bringing May Enforcement Priorities Into Unauthorized ENDS Detentions
The U.S. Food and Drug Administration has revised the rules under Import Alert 98-07 to incorporate its May 2026 enforcement-priority policy for certain electronic nicotine delivery systems marketed without premarket authorization. The alert continues to allow detention without physical examination, or DWPE, for ENDS lacking required marketing authorization, while directing field divisions to apply the May risk-based framework. When necessary, detention or refusal decisions must also undergo review by the FDA's Center for Tobacco Products. Products including PACHA and Vuse Pro have already emerged as industry examples of the May policy, although enforcement discretion does not constitute FDA marketing authorization.
News
Sep.28 by 2Firsts Perspectives
2Firsts Hosts China Market Forum at InterTabac as Global Industry Attention to China’s Tobacco Sector Deepens
2Firsts Hosts China Market Forum at InterTabac as Global Industry Attention to China’s Tobacco Sector Deepens
On September 16, 2Firsts hosted a China-focused industry forum during InterTabac in Dortmund, bringing together more than 30 participants from North America, Europe, India, South Korea and other markets. The session covered traditional tobacco, next-generation products, exports, technology, regulation and supply chains, while examining how China’s tobacco sector operates, where its transformation may be heading, and why its growing role matters increasingly to companies across the global tobacco and nicotine industry.
Sep.21
Philip Morris Malaysia Again Meets Religious Authority Over Cigarette Alternatives as Perlis Mufti Responds on Halal Criteria
Philip Morris Malaysia Again Meets Religious Authority Over Cigarette Alternatives as Perlis Mufti Responds on Halal Criteria
Philip Morris Malaysia Managing Director Naeem Shahab Khan met Perlis Mufti Mohd Asri Zainul Abidin on September 17 and presented the company's shift from conventional cigarettes toward alternative products. The mufti said a product could be considered halal if it is clean, its side effects are not harmful or can be controlled, and it does not involve excessive waste. His remarks did not mention IQOS or any other specific PMI product and did not amount to a new product-specific religious ruling. It was at least the second publicly reported engagement between Philip Morris Malaysia and a Malaysian religious institution over cigarette alternatives within six months.
Regulations
Sep.18 by 2Firsts Perspectives
FDA Unifies Tobacco Registration and Product Listing Form Across Product Categories
FDA Unifies Tobacco Registration and Product Listing Form Across Product Categories
The U.S. FDA has consolidated two tobacco establishment registration and product listing forms into a redesigned Form FDA 3741 covering all regulated product categories, including e-cigarettes, heated tobacco products and nicotine pouches. The current requirements remain limited to domestic establishments. Separately, the FDA has proposed extending registration and product listing requirements to foreign manufacturers, signaling greater regulatory attention to manufacturing entities and product-level information across the tobacco and nicotine supply chain.
FDA
Sep.30
India Duty-Free Nicotine Pouch Sales Face Regulatory Test as ZYN, FOX Classification Remains Open
India Duty-Free Nicotine Pouch Sales Face Regulatory Test as ZYN, FOX Classification Remains Open
The Bombay High Court has ruled that airport duty-free shops are not exempt from India's domestic regulatory laws merely because they operate beyond the customs barrier, leaving in place a sales halt covering ZYN and FOX nicotine pouches at Mumbai's international airport. The court, however, did not determine that the products necessarily qualify as "drugs" under India's Drugs and Cosmetics Act. The retailers have four weeks to submit product information to the appropriate authorities, including CDSCO, which must complete its review within 30 days of receiving the submissions.
Sep.24