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On October 25, it was reported that the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation jointly issued an announcement on the collection of consumption tax on electronic cigarettes. The announcement shall be implemented on Nov1, 2022. The following is the full text of the announcement:

1. About tax items and objects

The electronic cigarette will be included in the scope of consumption tax collection, Add a subcategory of electronic cigarettes under the tobacco duty.Electronic cigarette refers to the electronic transmission system used to produce aerosols for people to smoke, including cartridge, vape devices, and electronic cigarette products sold in combination with cartridge, vape devices.

2.About taxpayer

Units and individuals that produce (import) and wholesale electronic cigarettes within the territory of the People’s Republic of China are consumption tax payers.  

The electronic cigarette production link taxpayer refers to the enterprise that has obtained the tobacco monopoly production enterprise license and has obtained or obtained the license to use the registered trademark of others’ electronic cigarette products (hereinafter referred to as the trademark holder). If the electronic cigarette is produced by the way of agent processing, the enterprise holding the trademark shall pay the consumption tax. The electronic cigarette wholesale taxpayer refers to the enterprise that has obtained the license of tobacco monopoly wholesale enterprise and operates the electronic cigarette wholesale business. Electronic cigarette import taxpayers refer to the entities and individuals that import electronic cigarettes.

3.About applicable tax rate 

Electronic cigarettes are taxed according to the fixed price. The tax rate of the production (import) link is 36%, and the tax rate of the wholesale link is 11%.

4. About Taxable Price

Taxpayers who produce or wholesale electronic cigarettes shall pay tax according to the sales volume of the production or wholesale electronic cigarettes. If taxpayers in the production process of electronic cigarettes sell electronic cigarettes on a commission basis, the tax shall be calculated according to the sales volume of dealers (agents) sold to electronic cigarette wholesale enterprises. Taxpayers who import electronic cigarettes shall calculate and pay tax according to the constituent taxable price. 

5. On Import and Export Policies

For taxpayers exporting electronic cigarettes, the export tax rebate (exemption) policy applies.  Add e-cigarettes to the list of imported goods that are not duty-free in the border exchange market and levy taxes according to regulations.  In addition to the above provisions, the collection of consumption tax on electronic cigarettes carried or posted into China by individuals shall be implemented in accordance with the relevant provisions of the State Council. Other matters concerning the consumption tax on electronic cigarettes shall be implemented in accordance with the Interim Regulations of the People’s Republic of China on Consumption Tax and the Detailed Rules for the Implementation of the Interim Regulations of the People’s Republic of China on Consumption Tax.