1Berita – The Ministry of Finance officially issues regulations on the taxation of electronic cigarettes, effective from January 1, 2024, as stipulated in Minister of Finance Regulation (PMK) Number 143/PMK/2023 concerning the Procedures for Collection, Deduction, and Deposit of Cigarette Taxes.
According to the PMK, the cigarette tax rate is set at 10 percent of the cigarette excise. Electronic cigarettes are also confirmed to be subject to cigarette taxes as outlined in the new regulation.
“The Ministry of Finance (MoF) has issued Minister of Finance Regulation (PMK) Number 143/PMK/2023 concerning the Procedures for Collection, Deduction, and Deposit of Cigarette Taxes,” stated the official announcement from the MoF on Friday (29/12).
“The Cigarette Tax referred to in this PMK includes electronic cigarette taxes,” it continued.
In addition to electronic cigarettes, the cigarette tax also applies to various tobacco products, such as cigarettes, cigars, leaf cigarettes, shredded tobacco, and other processed tobacco products.
“The Cigarette Tax rate is set at 10% (ten percent) of the Cigarette Excise,” reads Article 2 Paragraph 3 of PMK Number 143/PMK/2023.
The MoF explained that the imposition of cigarette taxes on electronic cigarettes is part of the transition period since the imposition of excise taxes on electronic cigarettes in 2018.
Electronic cigarettes are now subject to cigarette taxes, which are levies on cigarette excise, known as piggyback taxes.
“The implementation of Cigarette Taxes on Electronic Cigarettes (REL) on January 1, 2024, is a form of the central government’s commitment to providing a transition period for the collection of cigarette taxes on electronic cigarettes since the imposition of its excise in mid-2018,” stated the official announcement from the MoF.
The government had previously officially increased the tobacco excise tariff (CHT) for cigarettes with an average increase of 10 percent.
These provisions are regulated in Minister of Finance Regulation (PMK) Number 191 of 2022 concerning the Tariff of Tobacco Excise for Cigarettes, Cigars, Leaf Cigarettes or Klobot, and Shredded Tobacco (TIS).
The excise tariff increase on the retail selling price of cigarettes is effective from January 1, 2024, as stipulated in Article 2 Paragraph (2) letter b of the PMK.
“The Retail Selling Price per Stick or Gram and the excise tariff per stick or gram of domestically produced Tobacco Products as listed in Appendix I letter B of this Ministerial Regulation shall be effective from January 1, 2024,” states the regulation.
