The Ministry of Finance ("MOF"), together with the General Administration of Customs ("GAC") and the State Taxation Administration ("STA"), recently released the Announcement on Levying Consumption Tax on Electronic Cigarettes, to be effective on November 1, 2022.
The country will impose consumption tax on electronic cigarettes ("E-cigarettes"), and create a sub-item of e-cigarettes under the tobacco tax items, according to the Announcement, which defines E-cigarettes as the electronic transmission system that are used to produce aerosol for people to smoke, including cartridges, smoking utensils and e-cigarette products sold in combination with cartridges and smoking utensils. It is stated that organizations and individuals that produce (import) or sell e-cigarettes in bulk in China are taxpayers of consumption tax, which will be levied at an ad valorem rate, and the applicable tax rate in the process of production (import) is 36 percent, while the tax rate for wholesale is 11 percent. The Announcement also made provisions on taxable price, import and export policies and others.