KUALA LUMPUR: Malaysia will likely propose regulating the e-vape industry under the retabled 2023 Budget, a move that will allow the government to add close to RM1 billion annually to its coffers over the near term.
The previous government had in 2022 Budget announced plans to expand tax collection to e-vape liquids containing nicotine by imposing excise taxes at RM1.20 per millilitre.
But JTI Malaysia recently estimated that the government had lost RM866 million last year due to non-collection of excise tax on these nicotine-containing e-vape liquids.
The government could potentially gain RM939 million in tax revenue in 2023 if it regulated the e-vape industry, based on the proposed tax rate of RM1.20 per millilitres, JTI Malaysia general manager Khoo Bee Leng said late last week.
The e-vape liquids that are widely available in Malaysia remain illegal under the Poisons Act 1952.
The e-vape industry reportedly accounts for about 30 per cent of the total nicotine market, which makes it a high untapped market for tax revenue for the government.
Industry observers believe that regulation and enforcement in the e-vape industry was highly important in order to not only increase government tax revenue, but also to reduce smuggling of illegal and untaxed cigarettes from neighbouring countries.
Overall, the government was estimated to have lost about RM5 billion in taxes annually on cigarettes due to illicit cigarette smuggling.