Repeat call for govt to regulate e-liquids


LOCAL vape associations have urged the government to quickly implement excise duty for vape e-liquids with nicotine to maximise the tax revenue collected from the vape industry.

This is following a recent report where the Customs Department stated that the excise collection for vape liquids amounted to less than RM100,000 in the first quarter of 2021 (1Q21), much lower than the figure estimated by the Malaysian Vape Chamber of Commerce (MVCC).

MVCC information head Ashraf Rozali said the government will be able to gain additional revenue that can be injected into the country if excise duty is implemented for vape e-liquids with nicotine, more so during this time where funds are needed to combat the pandemic.

“We are already in 2Q21 and if only RM100,000 is collected in 1Q21, then this shows that the taxation framework on vape products is ineffective as it does not cover all the products sold in the market.

“The government must take into account our proposal to implement excise duties on vape e-liquids with nicotine to maximise the amount of tax revenue collected from the vape industry,” he said in a statement yesterday.

Previously, the MVCC had estimated that the government would be able to collect tax revenue amounting to RM300 million if the excise duty imposed on the vape industry covers products containing vape e-liquids with nicotine.

Currently, the government only imposes a 0% excise tax on vape devices and 40 sen on each millilitre (ml) of non-nicotine vape e-liquids, effective Jan 1, 2021.

According to reports by the Health Ministry, there are approximately 1.12 million vape users in Malaysia.

Ashraf said the current low tax collection is because excise duty is only imposed for non-nicotine vape e-liquids which make up only 3% of the vape market.

Meanwhile, the majority of the market (97%) — which comprises vape e-liquids with nicotine — is currently not taxed unregulated.

Malaysian Vape Industry Advocacy president Rizani Zakaria said the industry is open to work with the government to provide input and participate in any discussions to develop regulations for the vape industry.

“Industry players have always supported the government in its move to implement a taxation framework on vape e-liquids with nicotine.

“In this difficult period, many are facing various problems, especially in terms of economic and employment opportunities. I believe the vape industry can be one of the sectors that helps revive the country’s economy by providing high yields to the government and employment opportunities,” he said.

He added that although the vape industry does not receive much attention from the government, the industry is valued at RM2.27 billion and has the capability to garner tax revenue for the country if a taxation framework is implemented properly.

Industry players are also of the opinion that the implementation of excise duty for vape e-liquids with nicotine and regulations for the vape industry can improve the overall industry ecosystem and benefit all.

“Although there is no regulation, the vape industry has grown rapidly. Imagine if the government focuses on the industry and implements regulation, really pays attention and regulates, we are confident that the local vape industry will be one of the main contributors to the national economy,” Rizani concluded.