Vietnam Government Considers New Tax Regulations on E-Cigarettes

According to a report in the Vietnam Labor newspaper, the Vietnamese Ministry of Finance has received comments from the government on decree No. 26/2023/ND-CP concerning export taxes. The Ministry of Health has requested the Ministry of Finance to grant preferential import treatment to e-cigarettes and related products, in order to avoid including them in the export tax list. However, new tobacco products and their equipment and components have not yet been clearly defined in Vietnam.

In addition, the Ministry of Health urges the Prime Minister and the Ministry of Industry and Trade to ban the trading and selling of e-cigarettes in Vietnam, citing their potential health risks. The Ministry of Public Security also stated that there is currently no import policy for the item, so setting a tax rate is not appropriate.

In this context, British American Tobacco proposes maintaining the current 0% tax rate, arguing that new generation tobacco products have the potential to reduce harm compared to traditional tobacco, and that a 50% tax rate does not align with international norms.

The Ministry of Finance explained that the adjustment of the tax rate is necessary and appropriate because e-cigarettes are a newly regulated item in the AHTN 2022 list that was not yet introduced during WTO commitments. The government has agreed to a 50% most favored nation tax rate to ensure consistency with the regulation of traditional cigarettes. They also stated that this move will not immediately impact the national budget, production, or commercial activities, and will not violate WTO commitments.