South Korea Struggles with Taxation of Synthetic Nicotine E-cigarettes

Oct.09.2024
South Korea Struggles with Taxation of Synthetic Nicotine E-cigarettes
South Korea estimates a loss of 25 billion USD tax revenue in the past four years from untaxed synthetic nicotine e-cigarettes.

According to a report from Daum News on October 8th, due to a legislative loophole, South Korea has failed to estimate the amount of tax revenue from synthetic nicotine e-cigarettes for the past four years, which could amount to as high as 3.3895 trillion Korean won (25 billion US dollars). This is mainly because natural nicotine e-cigarettes, similar in composition, have been subject to taxation since 2021, while synthetic nicotine has been excluded.


On the 8th, Song Eon-seok, Chairman of the Planning and Finance Committee of the South Korean National Assembly, discovered through analyzing data from the Ministry of Planning and Finance, the Customs Service, the Food and Drug Safety Agency, and the e-cigarette Association, that the taxes imposed on synthetic nicotine e-cigarettes have not increased annually since 2021. The amounts are 535.8 billion Korean won (approximately $400 million), 989.1 billion Korean won (approximately $700 million), 1,124.9 billion Korean won (approximately $800 million), and 739.7 billion Korean won (approximately $550 million) as of August 2024.


Currently, e-cigarettes using synthetic nicotine are not classified as tobacco under existing laws, so there are no related tax policies. Due to this legal loophole, South Korea may become a "paradise" for international tobacco companies. British American Tobacco (BAT) is expected to launch a synthetic nicotine e-cigarette in November, with South Korea as its initial market.


In the 22nd National Congress, five tobacco industry law amendments, including the one that would regulate and tax synthetic nicotine e-cigarettes, are currently under review, although progress has been slow. Chairman Song, who is responsible for preparing the amendments, stated that the issue of regulatory and taxation gaps caused by synthetic nicotine e-cigarettes will be promptly addressed.


We welcome news tips, article submissions, interview requests, or comments on this piece.

Please contact us at info@2firsts.com, or reach out to Alan Zhao, CEO of 2Firsts, on LinkedIn


Notice

1.  This article is intended solely for professional research purposes related to industry, technology, and policy. Any references to brands or products are made purely for objective description and do not constitute any form of endorsement, recommendation, or promotion by 2Firsts.

2.  The use of nicotine-containing products — including, but not limited to, cigarettes, e-cigarettes, nicotine pouchand heated tobacco products — carries significant health risks. Users are responsible for complying with all applicable laws and regulations in their respective jurisdictions.

3.  This article is not intended to serve as the basis for any investment decisions or financial advice. 2Firsts assumes no direct or indirect liability for any inaccuracies or errors in the content.

4.  Access to this article is strictly prohibited for individuals below the legal age in their jurisdiction.

 

Copyright

 

This article is either an original work created by 2Firsts or a reproduction from third-party sources with proper attribution. All copyrights and usage rights belong to 2Firsts or the original content provider. Unauthorized reproduction, distribution, or any other form of unauthorized use by any individual or organization is strictly prohibited. Violators will be held legally accountable.

For copyright-related inquiries, please contact: info@2firsts.com

 

AI Assistance Disclaimer

 

This article may have been enhanced using AI tools to improve translation and editorial efficiency. However, due to technical limitations, inaccuracies may occur. Readers are encouraged to refer to the cited sources for the most accurate information.

We welcome any corrections or feedback. Please contact us at: info@2firsts.com

FDA Authorizes 24 VELO Nicotine Pouches, Increasing U.S. Authorized Total by 56%
FDA Authorizes 24 VELO Nicotine Pouches, Increasing U.S. Authorized Total by 56%
The U.S. FDA authorized 24 VELO nicotine pouch products from a British American Tobacco subsidiary, raising the total number of authorized products from 43 to 67, a 55.8% increase. The newly authorized 4 mg products include lime and passion fruit flavors and feature certified child-resistant packaging. VELO's first FDA marketing authorization adds BAT to a list previously limited to PMI and Altria products, while bringing the agency's nicotine pouch review pilot total to 47 authorized products.
Oct.30
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
Pennsylvania Vape Directory Law Survives Court Challenge From Nova Distro and Others Amid Similar Rulings Across States
Pennsylvania Vape Directory Law Survives Court Challenge From Nova Distro and Others Amid Similar Rulings Across States
A U.S. federal court upheld Pennsylvania's vape directory law on October 14, rejecting a challenge brought by Nova Distro, 101 Distributors and companies operating Tobacco Hut retail stores. Court records show that vaping accounts for about 60% of Tobacco Hut's profits and that the chain held approximately $2 million in inventory potentially subject to seizure under the law as of June 2. Pennsylvania began enforcement on October 19. The ruling follows similar appellate decisions in other states, even as new research shows that unlisted vaping products continue to account for substantial sales in states with established directories.
Regulations
Oct.22
Italy Proposes Earlier Vape and HTP Tax Hikes, New Rules for E-Liquid Pricing, Exclusive Deals and Distribution
Italy Proposes Earlier Vape and HTP Tax Hikes, New Rules for E-Liquid Pricing, Exclusive Deals and Distribution
Italy's proposed 2027–2029 budget would bring forward scheduled tax increases for e-cigarette liquids and heated tobacco products from January 1, 2028, to July 1, 2027. The consumption tax coefficient for nicotine-containing e-liquids would rise from 20% to 22%, that for nicotine-free liquids and applicable flavorings from 15% to 17%, and the heated-tobacco coefficient from 41% to 42%. The bill would also introduce official retail price schedules for e-liquids, restrict exclusive agreements between retailers and suppliers, and limit single-brand-dominated displays, sales incentives and bundled offers. Importing, authorized warehousing and retailer sourcing arrangements would also change. The proposals remain subject to parliamentary approval and subsequent implementing regulations.
Regulations
Nov.04
North Carolina Tightens Vape Product Directory Enforcement, Expands State and Local Powers as Violators Face Fines, Product Seizures and License Suspension or Revocation
North Carolina Tightens Vape Product Directory Enforcement, Expands State and Local Powers as Violators Face Fines, Product Seizures and License Suspension or Revocation
North Carolina has expanded enforcement of its vapor product directory rules, authorizing more state and local law enforcement participation and establishing a task force led by the State Bureau of Investigation. The legislation requires at least one unannounced compliance inspection annually for retailers, distributors and wholesalers handling covered products. Penalties effective October 1, 2026, include civil fines of $500–$750 for a first violation and $1,000–$1,500 for repeated violations within 12 months, along with potential license suspension or revocation. Manufacturers may face penalties of $10,000 per unlisted product. The measures strengthen the product directory system established in 2024.
Regulations
Oct.28
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