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 | PMI Launches Airport-Exclusive IQOS Skylens Limited Edition, Expanding From Japan’s Narita to Travel Retail Markets in 13 Countries Summary
Product | PMI Launches Airport-Exclusive IQOS Skylens Limited Edition, Expanding From Japan’s Narita to Travel Retail Markets in 13 Countries Summary
Philip Morris International (PMI) has introduced the airport-exclusive limited-edition IQOS ILUMA i PRIME Skylens, the company’s first device created specifically for airport travel retail. Inspired by the world of flight and finished in metallic blue, Skylens debuted at Narita International Airport in Japan before expanding into selected airport duty-free and travel-retail channels across 13 countries in Europe, Asia, the Middle East and Africa. The product retains the existing IQOS ILUMA i PRIME platform, with differentiation centered on airport exclusivity, design and travel-retail execution rather than a new heating architecture.
PMI
Aug.19
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
NAS 2026 | FDA CTP Director Says PMTA Pathway Is “Predicated on Tobacco Harm Reduction”
NAS 2026 | FDA CTP Director Says PMTA Pathway Is “Predicated on Tobacco Harm Reduction”
At the 2026 New Approaches Summit in New York, FDA Center for Tobacco Products Director Bret Koplow said the PMTA pathway is “predicated on tobacco harm reduction.” He outlined four CTP priorities: youth prevention, helping adults quit or switch to lower-risk products, improving relative-risk communication, and reducing unauthorized products. Koplow also addressed flavored e-cigarettes, public risk perceptions, industry credibility and efforts to make PMTA reviews more efficient and predictable.
Sep.26
Snowplus Enters Japan’s FamilyMart Network With Zero-Nicotine NEO Line and Kishidan Campaign
Snowplus Enters Japan’s FamilyMart Network With Zero-Nicotine NEO Line and Kishidan Campaign
Snowplus distributor H&S said the zero-nicotine, zero-tar NEO vaping line will begin rolling out across FamilyMart stores in Japan from September 14, 2026, excluding some locations. The DASH line will also be sold at selected FamilyMart stores in southern Kyushu and Okinawa. Snowplus simultaneously named Japanese rock band Kishidan as a brand ambassador, combining convenience-store distribution with a broader consumer marketing push in Japan.
Sep.15
Product | JTI Philippines Expands Nordic Spirit Nicotine Pouch Portfolio With Dark Pop and Red Frost
Product | JTI Philippines Expands Nordic Spirit Nicotine Pouch Portfolio With Dark Pop and Red Frost
JTI Philippines has expanded the Nordic Spirit nicotine pouch portfolio in the Philippines with two new variants, Dark Pop and Red Frost. Both products maintain the brand’s tobacco-free nicotine pouch positioning, with Dark Pop featuring a fizzy cola profile with citrus and sweet notes, while Red Frost combines cool mint with sweet red berry flavors. The two variants are now available through Philippine online retail channels.
Aug.18
AIR Global Starts Debt Refinancing Four Months After Nasdaq Listing With About $400 Million Notes Expected
AIR Global Starts Debt Refinancing Four Months After Nasdaq Listing With About $400 Million Notes Expected
AIR Limited, a wholly owned subsidiary of AIR Global, has launched an offering of U.S. dollar-denominated senior unsecured notes, with proceeds primarily intended to repay its existing term loan and revolving credit facility. AIR has not disclosed the final size, maturity or coupon; Refinitiv, citing Moody's, reported an expected issuance of approximately $400 million and a Ba3 rating. AIR had about $412.4 million outstanding under the two bank facilities at June 30 and net debt of $344.8 million. In the first half of 2026, AIR's Al Fakher-led flavored shisha molasses business generated about 99% of company revenue, while New Growth Categories including Crown Switch produced $2.2 million in revenue and remained loss-making on an adjusted EBITDA basis.
Sep.23