The Malaysian government has postponed imposition of a new tax on nicotine e-liquid after complaints from consumers and industry over the steep proposed rates. The plan also would have tripled the existing tax on zero-nicotine e-liquid. The vape taxes were supposed to go into effect Jan. 1.
The postponement was announced earlier this week by the Royal Malaysian Customs Department. No reason was given for the delay, according to The Edge Markets.
Finance Minister Tengku Zafrul Aziz announced Oct. 29 that the government’s 2022 budget included new taxes on vaping products that contain nicotine—currently illegal in consumer products sold in Malaysia. A few days earlier, Health Minister Khairy Jamaluddin had informed the World Health Organization that the country would legalize and regulate vaping products to prevent youth access.
But details of the new tax proved problematic. The planned tax rate was 1.20 Malaysian ringgits (RM) per milliliter—about $0.29/mL. The current RM 0.40 tax on zero-nicotine vape juice would have tripled in the new plan.
Such a steep tax rate—about $17 on a 60 mL bottle of e-liquid—would have forced legal sellers to compete with much less expensive black market products. “The increase in tax will make vape products more expensive than tobacco cigarettes in Malaysia,” Malaysian Vape Industry Advocacy (MVIA) president Rizani Zakaria told The New Straits Times.
The high tax rate is opposed by Malaysian vape advocates, and at least one medical organization has also urged the government to adopt taxes that recognize the low relative risk of vaping versus smoking.
“The taxation levels for tobacco harm reduction (THR) products in Malaysia must remain risk-proportionate, benchmarked against high-risk products such as cigarettes,” Federation of Private Medical Practitioners Associations Malaysia president Steven Chow said in a statement last November.
Malaysia currently prohibits nicotine sales for non-medical purposes, and police raids have occasionally disrupted the country’s thriving vape trade. Eliminating the current prohibition and regulating nicotine vaping would make Malaysia one of the few Southeast Asian countries without a vape ban.