An e-cigarette smoker File photo: VCG

Three Chinese government departments issued a notice on Tuesday imposing an excise tax on e-cigarettes starting on November 1, which will be categorized under the consumption tax on cigarettes, with the tax rates on production and imports set at 36 percent, and 11 percent on wholesale. 

The notice was jointly issued by the Ministry of Finance, the General Administration of Customs, and the State Taxation of Administration, noting that the measure aims to improve the consumption tax system, maintain a fair and uniform tax system, and use the kind of tax to guide healthy consumption.

The export tax refund and exemption policy will be applicable for taxpayers exporting e-cigarettes, read the notice. 

Analysts noted that the industry will be able to benefit from the taxation policy, especially as exports can continue to enjoy the tax rebate policy, which is a major issue for the domestic e-cigarette industry. 

As the tax refund and exemption policy is still valid for exporters, exports of e-cigarettes will continue to be encouraged. This accounts for 90 percent of the entire market, stcn.com reported on Tuesday, citing industry experts. 

Experts said that the annual sales revenue of domestic e-cigarette makers is about 20 billion yuan ($27.36 billion), so the tax may contribute an additional 10 billion yuan to the government's annual revenue. 

The cigarette market supervisor, China Tobacco, announced in September new requirements mandating that domestic e-cigarette manufacturers and traders obtain a license before operating their business, a measure that took effect on October 1. 

On the same day, the mandatory national standards for e-cigarettes drawn up by the State Administration for Market Regulation became effective after five years of waiting. The rules have detailed criteria for use, and the protection of minors.

Global Times