South Korea Rejects 16 Trillion Won Tax-Evasion Claim Over Chinese Synthetic Nicotine

Market
Jun.25
South Korea Rejects 16 Trillion Won Tax-Evasion Claim Over Chinese Synthetic Nicotine
The South Korean government rejected allegations that Chinese synthetic-nicotine e-liquids were linked to about 16 trillion won in tobacco tax evasion, saying China does not ban synthetic nicotine exports and the estimate is difficult to verify, while acknowledging that pre-law synthetic-nicotine inventory is effectively difficult to tax.

Key Points

  •  South Korea rejected the 16 trillion won estimate.
  • China has not banned synthetic nicotine exports.
  •  Some false declarations may still exist.
  •  Pre-law inventory creates a tax gap.

2Firsts

June 25, 2026

According to Seoul Economic Daily’s English edition, the South Korean government has rejected allegations of about 16 trillion won in tobacco tax evasion involving Chinese synthetic-nicotine e-liquids, saying exports of Chinese synthetic nicotine are not banned. However, the government acknowledged that tobacco taxes are effectively difficult to levy on synthetic-nicotine inventory manufactured or imported before the Tobacco Business Act took effect.

Tax-Evasion Estimate Rejected

South Korea’s Ministry of Economy and Finance and Korea Customs Service explained the government’s position at a background briefing. The core issue is whether Chinese e-liquids imported as synthetic nicotine, and therefore untaxed, were in fact taxable natural-nicotine products.

Rep. Jung Jin-wook of the Democratic Party of Korea had earlier argued that 16 trillion to 20 trillion won in tobacco taxes may have been evaded from 2016 through last year. His claim rested on the premise that synthetic-nicotine e-liquids could not be manufactured or exported under China’s legal system, meaning related imports from China must have been natural nicotine.

The South Korean government rejected that premise. Yang Seung-hyuk, head of customs clearance planning at Korea Customs Service, said strict manufacturing control in China means only licensed companies can produce such products. He said South Korea had received a response indicating that no rule bans or restricts exports of synthetic nicotine to South Korea.

Yang said some false declarations may be possible, but it is not the case that the entire import volume involved natural nicotine disguised as synthetic nicotine. The government therefore viewed the 16 trillion won tax-evasion estimate as based on an overly broad premise.

The government also said the estimate is difficult to confirm. The figure was calculated on the assumption that about 300 million 30 ml bottles were sold over 10 years and that about 54,000 won in tax should have been levied per bottle. Heo Seung-cheol, the Ministry of Economy and Finance’s treasury policy director, said the government finds it difficult to confirm the 300 million bottle figure, which was calculated on the premise that all imported volume was natural nicotine disguised as synthetic nicotine.

Customs Screening Tightened

Since November 2019, Korea Customs Service has required importers of synthetic nicotine to submit trade contracts, manufacturing process charts, manufacturing licenses, export declaration certificates and material safety data sheets. It also made the natural-or-synthetic classification and nicotine content mandatory items in import declarations.

In November 2022, Korea Customs Service independently developed a component-analysis method to distinguish between natural nicotine and synthetic nicotine. Since then, the volume of false declarations has declined sharply.

The data show that South Korea caught 10 cases involving 290 liters of natural nicotine falsely declared as synthetic nicotine in 2022; 27 cases involving 163 liters in 2023; five cases involving 1.62 liters in 2024; and two cases involving 0.02 liters last year.

These figures support the government’s position that false declarations have occurred, but the detected volume does not support the claim that all imports were disguised products.

For South Korea’s e-cigarette market, synthetic-nicotine regulation has shifted from import declaration alone toward tax alignment, inventory management and post-import distribution control. The government’s rejection of the large-scale tax-evasion estimate does not end the broader synthetic-nicotine tax dispute.

Pre-Law Inventory Tax Gap

South Korea incorporated synthetic-nicotine e-liquids into the tobacco category under the Tobacco Business Act from April 24. However, the law applies only to products manufactured or imported on or after the enforcement date, leaving earlier inventory outside the new tax scope.

The government said this approach reflected concerns over retroactive legislation raised during National Assembly deliberations. Heo Seung-cheol said inventory products manufactured or imported before the enforcement date effectively cannot be taxed.

As a result, although the 16 trillion won estimate was rejected, synthetic-nicotine e-cigarette inventory accumulated before the new law remains a tax gap. For companies, inventory products, raw nicotine liquids, online sales and product labeling are likely to become key regulatory focus areas.

To prevent long-term distribution of inventory products, the government is implementing safety management standards, including requesting toxicity reviews, labeling nicotine content and recommending suspension of online sales. It also plans to examine possible regulatory evasion, including sales of raw nicotine liquid, products marketed as nicotine-free while containing nicotine, and nicotine analogues.

South Korea’s synthetic-nicotine e-cigarette regulation is moving from product definition and tax inclusion toward parallel oversight of customs clearance, inventory, online channels and alternative nicotine-like substances. Future disputes may focus less on the 16 trillion won estimate itself and more on how pre-law inventory is handled, whether evasion sales occur and whether synthetic- and natural-nicotine products face consistent tax and safety regulation.

Follow 2Firsts for the latest updates on global tobacco harm reduction, nicotine products and regulatory developments.

 

封面图源:Seoul Economic Daily

Cover image:Seoul Economic Daily

 

Kumulus Vape2026 H1 Revenue Falls 8.3% but Profit Rises 24% as B2B Weakens and Consumer Channels Grow
Kumulus Vape2026 H1 Revenue Falls 8.3% but Profit Rises 24% as B2B Weakens and Consumer Channels Grow
French vaping company Kumulus Vape reported first-half 2026 revenue of €25.5 million, down 8.3% year over year, as its core B2B distribution business fell 11% to €21.6 million. B2C and store-network revenue rose 5.6% and 17.8%, respectively. Commercial margin increased to 26.3% from 21.7%, while net profit rose 24.1% to €0.8 million. The company attributed the profitability improvement to catalog optimization, logistics restructuring and the ramp-up of Labster, its in-house production unit for proprietary brands.
Market
Sep.17 by 2Firsts Perspectives
PMI CEO Attends Opening of IQOS Global Flagship in Tokyo’s Ginza as 1,814 Limited ILUMA i PRIME Sets Launch
PMI CEO Attends Opening of IQOS Global Flagship in Tokyo’s Ginza as 1,814 Limited ILUMA i PRIME Sets Launch
IQOS opened its first global flagship, IQOS Flagship Ginza, in Tokyo on September 4, 2026, replacing the former IQOS Store Ginza after nearly a decade of operation. The new location expands conventional product retail into member lounges, digital experiences, art installations and brand programming. IQOS also launched a Ginza-exclusive IQOS ILUMA i PRIME set limited to 1,814 individually numbered units, priced at JPY11,980, or about US$77. PMI Sales Strategy Consultant Yuji M. later said on LinkedIn that more than 500 people had lined up from the night before the opening.
Sep.07
Russia Adds Vapes to “Strategic Goods” List, Illegal Cross-Border Trade Faces Up to Five Years in Prison
Russia Adds Vapes to “Strategic Goods” List, Illegal Cross-Border Trade Faces Up to Five Years in Prison
Russia will place e-cigarettes and related nicotine products under its “strategic goods” framework from August 20, 2026. According to TVP World’s report published on August 19, the newly listed items include e-cigarettes, electronic smoking devices, vape liquids and nicotine salts. Individuals who illegally move these products across Russia’s customs border or its state border with other Eurasian Economic Union (EAEU) members could face up to five years in prison if shipment values exceed 100,000 rubles (about €1,000), provided all elements of a criminal offence are established.
Aug.20
U.S. Expands Illicit Vape Enforcement as ATF Brings PACT Act Powers Into Trade Fraud Task Force
U.S. Expands Illicit Vape Enforcement as ATF Brings PACT Act Powers Into Trade Fraud Task Force
The U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives said on September 23 that it has joined the interagency Trade Fraud Task Force to strengthen enforcement against illegal, misdeclared and smuggled vape and tobacco products. ATF will bring its authority under the Prevent All Cigarette Trafficking Act into the task force, including registration, reporting, shipping and record-inspection requirements covering interstate sales of electronic nicotine delivery systems. ATF said the move will strengthen its ability to trace illicit products from U.S. points of entry through domestic trafficking and distribution networks.
News
Sep.28 by 2Firsts Perspectives
Trump Names Darrell Scott as CDC Tobacco Health Adviser, Citing Tobacco Risks and Harm-Reduction Solutions
Trump Names Darrell Scott as CDC Tobacco Health Adviser, Citing Tobacco Risks and Harm-Reduction Solutions
U.S. President Donald Trump has named Pastor Darrell Scott to serve as an adviser on tobacco health issues on the Centers for Disease Control and Prevention’s Advisory Committee to the Director. Trump said Scott would focus on the burden of tobacco-related disease and help examine ways to protect Americans from dangerous tobacco products while supporting solutions that reduce harm. Scott’s public career has largely centered on faith leadership, community advocacy and politics.
Sep.02
SMOORE’s DOJO by VAPORESSO to Launch New Global Brand Identity on September 1
SMOORE’s DOJO by VAPORESSO to Launch New Global Brand Identity on September 1
According to recent LinkedIn posts from people at VAPORESSO, SMOORE and a German distribution partner, vape brand DOJO will begin rolling out a new global brand identity on September 1, 2026, led by a redesigned handwritten logo. The new visual system will be gradually applied across product packaging, marketing materials and digital assets over the following months. Fabio Corsaro, Head of Marketing and Purchasing at MG Wesel GmbH, said the rebrand was related to trademark issues, but that explanation has not been publicly confirmed by DOJO, VAPORESSO or SMOORE. DOJO is currently promoting its Blast X product in Germany.
Aug.31