Indonesian Vapor Industry Associations Urge Government to Postpone E-cigarette Taxes

According to a recent report by Indonesian local media outlet Detik, the Indonesian National Vaporizer Association (PAVENAS), comprised of various organizations including the Indonesian Personal Vaporizer Association (APVI), the Indonesian Vapers Alliance (AVI), the Indonesian Electronic Liquid Oil Manufacturer Association (PPEI), the Indonesian E-Cigarette Entrepreneurs Association (APPNINDO), and the Bali Vaporizer Association (AVB), paid a visit to the Ministry of Finance in Jakarta. They requested that the government delay the implementation of tobacco taxes on e-cigarettes until 2027 and also urged against adding any additional consumption taxes during the implementation process.

PAVENAS also encourages the government to prioritize transparency and fairness while formulating policies, allowing businesses to participate directly

Garindra Kartasasmita, the Secretary General of APVI, representing PAVENAS, expressed concern over the plan to increase taxation on e-cigarettes in addition to the current tobacco tax. This move is seen as a significant blow to entrepreneurs, consumers, and industry participants.

In addition, this plan has never been communicated to us or discussed beforehand. It should be noted that the e-cigarette industry is a relatively new one, with the majority of industry participants coming from the community and small to medium-sized enterprises," he said.

Garendera emphasized that there are plans to impose the current sales tax of 10% on e-cigarettes, while also increasing the consumption tax on e-cigarettes by 15% (as previously stipulated in PMK Regulation No. 192 of 2022). This will impose a heavy burden on the industry.

If this is done, by 2024, the tax burden on the e-cigarette category will exceed 25%. This figure is even higher than the increase in traditional cigarette consumption tax in 2020," he said.

Galandra stated that the plan to impose cigarette taxes on e-cigarettes by 2024 appears to be rushed and lacking careful consideration. The parties affected by this policy were not involved in the entire formulation process.

We request the government to provide insight into the plan to impose cigarette taxes on e-cigarettes. The information related to this discourse was only communicated by the General Administration of Fiscal Equilibrium and the General Administration of Customs and Consumption Tax at the 2024 Consumer Tax Department Policy Socialization Conference held on November 28, 2023, with the implementation set to take effect on January 1, 2024. In other words, there is less than a month remaining until its implementation.

He stated, "There was no discussion process, and we expressed our opposition to the sudden implementation time and the impact of the triple blow directly.

In light of this, PAVENAS is urging the government to impose cigarette taxes on e-cigarettes at least five years from now. This demand echoes the implementation of traditional cigarette taxes, which also had a transition period.

We hope that the policy-making process related to the e-cigarette industry can be conducted in an open and transparent manner, allowing all stakeholders affected by regulations to participate. This is crucial for the overall business continuity of the industry, including investments and employment," he said.

PAVENAS decided to take matters into their own hands and directly approach the Ministry of Finance after not receiving any response to their two written letters and request for a hearing. They sought answers from the government, particularly the Bureau of Fiscal Equilibrium, and demanded greater transparency.

Members of PAVENAS hope that through their presence, the government will be willing to engage in discussions and hold public hearings with all parties affected by the proposed e-cigarette tax to be implemented in 2024.

Garender concluded, "If e-cigarettes are still subjected to tobacco taxes in 2024, we are prepared to take legal action in order to seek justice for business actors.