Will the price of electronic cigarettes rise after the implementation of consumption tax?
2022-10-28
Recently, the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation issued the Announcement on the Collection of Consumption Tax on Electronic Cigarettes (hereinafter referred to as the Announcement), which included electronic cigarettes in the scope of consumption tax collection and added electronic cigarettes under the tobacco tax. This means that the consumption tax on electronic cigarettes will be officially implemented in China. Data map. China News Network reporter Jin Shuo's supervision of electronic cigarettes is keeping pace with traditional cigarettes. Zhang Jianshu, president of Beijing Tobacco Control Association, told China News Finance reporter, "This is the trend of the times, and it is a means for relevant departments to strengthen tobacco control and supervision." In recent years, the domestic electronic cigarette industry has developed rapidly, but at the same time, the industry also has uneven product quality, such as a large number of products have serious quality and safety hazards such as unsafe ingredient addition, tobacco oil leakage, and low-quality batteries. Many studies at home and abroad also show that electronic smoke is harmful to health. In November 2021, the State Council issued the Decision on Amending the Regulations for the Implementation of the Tobacco Monopoly Law of the People's Republic of China, which added Article 65 that "electronic cigarettes and other new tobacco products shall be implemented with reference to the relevant provisions of these Regulations on cigarettes", and formally incorporated electronic cigarettes into the tobacco system. In March and April this year, the National Standards for Electronic Cigarettes Management Measures and Electronic Cigarettes were released one after another, and flavored electronic cigarettes other than tobacco flavor and electronic cigarettes that can add aerosols by themselves were prohibited from sale. In addition, the implementation of the Detailed Rules for the Identification and Detection of Electronic Cigarette Products, the Regulations on the Warning Signs of Electronic Cigarettes, the Detailed Rules for the Logistics Management of Electronic Cigarettes, the Detailed Rules for the Management of Electronic Cigarette Transactions (for Trial Implementation) and other documents have been issued successively, which further standardizes the development of the electronic cigarette industry. "With the release of the consumption tax levy announcement, the supervision of domestic electronic cigarettes has been implemented in stages. The domestic electronic cigarettes are in line with the traditional cigarettes in terms of production specifications, circulation and sales, taxation, etc., and the industry risk has been significantly released." Li Hongpeng, an analyst with Cinda Securities, said. After the release of the Announcement, the reporter from Zhongxin Finance and Economics noticed that the electronic cigarette sector continued to strengthen. As of October 27, Shunhao shares had risen for two consecutive days, and other relevant stocks also rose in succession. In addition, Hong Kong stock Simore International rose sharply for two consecutive days, and the US stock fogwick Technology rose more than 40% on the 26th local time. An electronic cigarette collection store in Fengtai District, Beijing. Xie Yiguan, a reporter from Chinanews. com, said that the price of electronic cigarettes may rise. The Announcement mentioned that electronic cigarettes are subject to the method of ad valorem taxation. The tax rate of the production (import) link is 36%, and the tax rate of the wholesale link is 11%. "At present, in the production tax collection and management of cigarettes in China, the consumption tax rates of Class A and Class B cigarettes are 56% and 36% respectively. The tax standard of electronic cigarettes is the same as that of Class B cigarettes, which is relatively loose, and also conforms to the practice that the electronic cigarette tax is lower than that of traditional cigarettes in the international market." Lu Guanyu, an analyst with Guohai Securities, said. Previously, electronic cigarettes were only used as ordinary consumer goods to collect 13% VAT. After the implementation of the new tax rate, the comprehensive cost of electronic cigarettes may rise. Will the price of electronic cigarettes rise as a result? Staff of a Yueke franchise store in Beijing
Edit：Ying Ying Responsible editor：Jia Jia
Source：chinanews.com.cn
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