Govt could rake in RM300m from vape tax

Estimated from average sales of RM1,000-RM2,000 daily of 3,000 vape retailers


THE government is projected to gain between RM265 million and RM300 million in tax revenue relating to vape products in the first year of the levies.

Malaysia Retail Electronic Cigarette Association (MRECA) president Datuk Adzwan Ab Manas said the estimated figures are derived from the sales value of some 3,000 vape retailers with an average sale of RM1,000 to 2,000 daily.

He said the estimated value accounts for e-liquids and e-cigarettes containing nicotine, but the amount would be significantly lower than RM265 million if the government decides to only implement taxation on vape products that have zero nicotine levels.

He said the tax value would be higher starting the second year, assuming clearer regulations going forward would reinvigorate the industry encouraging more players.

“That is an estimation. If the industry booms again like in 2015, the potential tax amount would be higher,” Adzwan told The Malaysian Reserve (TMR).

In Budget 2021, the government introduced an excise duty of 10% on devices for all types of e-cigarettes and non-e-cigarettes, including vapes, effective Jan 1, 2021. The liquid used will be taxed 40 sen per millilitre.

2015 was considered as the heyday of Malaysia’s vape enterprises, but a series of crackdowns on the outlets have caused many businesses to close permanently as they could not regain footing, Adzwan said.

He said MRECA and other vape associations met with the Royal Malaysian Customs Department recently to discuss policies, regulations and tax.

They pitched electronic nicotine delivery systems (ENDS) as an alternative to reduce the number of cigarette smokers in Malaysia.

Adzwan said three scenarios were considered in the discussion — a “total ban” of all forms of vaping; “zero nicotine” where e-liquids and e-cigarettes containing nicotine are prohibited; and “regulated ENDS” including type and quantity of nicotine in e-liquids and e-cigarettes.

Universiti Kebangsaan Malaysia’s Faculty of Medicine’s Community Medicine Prof Dr Sharifa Ezat Wan Puteh said international literature showed that vaping must be accompanied with behaviour therapy and other tobacco-control measures for it to be successful in helping smokers quit.

Despite the original intention of vaping as a harm reduction measure, she said vape abuse and the potential of non-smokers getting hooked with nicotine in vape products as well as the rise of dual users are the main concerns.

“By right, vaping must not be a gateway to smoking, but due to lack of enforcement, youngsters are abusing it and using it to start cigarette smoking. Vape’s initial purpose is to help quit smoking,” Sharifa Ezat told TMR.

Granted, Adzwan said such concerns strengthen the need for holistic regulations that would cover proper testing and quality system standards for vaping devices and flavoured liquids, retailers’ registration and age restrictions, among others.

“If local producers can pass other countries’ regulations, what is stopping us here?”