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E-cigarettes may face new taxation soon

Published: 23 Sep. 2025, 09:43 Updated: 23 Sep. 2025, 18:41

E-cigarettes are on sale at a vending machine in Mapo District, western Seoul. [YONHAP]

A bill to revise the Tobacco Business Act to classify synthetic nicotine — a key ingredient in liquid e-cigarettes — as tobacco has cleared its first hurdle at the National Assembly. If the bill passes the main session, liquid e-cigarettes will become subject to taxation. Prices will inevitably rise, but the government stands to secure more than 900 billion won ($646 million) in additional annual tax revenue.

The National Assembly’s Strategy and Finance Committee held a subcommittee meeting on economic and fiscal policy and approved the amendment on Monday. The revision expands the legal definition of tobacco from “tobacco leaf” to “tobacco or nicotine.” If passed in the main session, liquid e-cigarettes using synthetic nicotine will be subject to the same regulations and taxes as conventional tobacco. It would be the first change to the legal definition of tobacco since the Tobacco Business Act was enacted in 1988 — 37 years ago.

Synthetic nicotine, which is cheaper than natural nicotine, is widely used in liquid e-cigarettes. However, because synthetic nicotine is not currently classified as tobacco under existing law, liquid e-cigarettes have been treated as industrial goods, free from the same sales and advertising restrictions as regular tobacco.

They also avoid the tobacco consumption tax, the National Health Promotion Levy, and other taxes imposed on heat-not-burn tobacco products, raising concerns about fairness. According to Rep. Song Eon-seog of the People Power Party, tax losses from uncollected levies on synthetic nicotine over the past four years have totaled approximately 3.39 trillion won. The National Assembly Budget Office estimates that applying the tobacco consumption tax to synthetic nicotine could bring in around 930 billion won annually.

Discussions on regulating synthetic nicotine began in 2016 but stalled for nine years due to opposition from the vaping industry. Momentum picked up in November last year after a government-commissioned study found that synthetic nicotine contains about twice as many harmful substances as its natural counterpart. Lawmakers also took into account that 35 of the 38 member states of the Organisation for Economic Co-operation and Development (OECD) — excluding only Korea, Japan and Colombia — regulate synthetic nicotine e-cigarettes as tobacco products.

E-cigarettes are on sale at a convenience store in Seoul on June 12. [YONHAP]

After reaching a bipartisan agreement in February at a subcommittee session of the Strategy and Finance Committee, lawmakers passed the bill on Monday with provisions to minimize the impact on small business owners. The revised bill includes a two-year grace period before implementing distance restrictions between e-cigarette retailers.

The bill will next be reviewed by the full Strategy and Finance Committee and the Legislation and Judiciary Committee before heading to the main session of the National Assembly. If it passes, prices for liquid e-cigarettes will inevitably rise. Currently, liquid e-cigarettes using natural nicotine are taxed at 1,800 won per milliliter.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY AHN HYO-SEONG [[email protected]]