Tariff policy
Tax policies for imported electronic cigarettes:
Consumption Tax: On October 25, 2022, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration issued an announcement, including electronic cigarettes in the scope of consumption tax collection. Electronic cigarettes are taxed based on the AD valorem rate method. The tax rate for the production (import) stage is 36%, and for the wholesale stage, it is 11%.
Export tax rebate policy: Taxpayers exporting electronic cigarettes are subject to the export tax rebate (exemption) policy. This is conducive to e-cigarette export enterprises reducing costs and enhancing international competitiveness.
Import supervision and compliance requirements:
License management: Enterprises engaged in the import business of electronic cigarettes must hold a tobacco monopoly license, and the imported products must be filed through the national unified electronic cigarette trading management platform.
Technical review and trademark registration: Imported electronic cigarette products must pass technical review and use trademarks approved and registered in China to ensure compliance with domestic quality and safety standards.
Packaging labeling standards: The packaging of imported products must be marked with the words prescribed by the administrative department in charge of tobacco monopoly under The State Council to facilitate market supervision and consumer identification.
Price influence
Cost increase and terminal price adjustment:
The transmission effect of consumption tax: The collection of consumption tax directly increases the production cost of imported e-cigarettes. Take a certain brand of cigarette cartrida as an example. Its terminal retail price may increase by 20% to 50% as a result. The specific increase depends on the brand's pricing strategy and market acceptance.
Supply chain cost allocation: Some brands have reduced unit costs through optimizing supply chain management and large-scale production, but the overall price is still on the rise.
Market Competition and Consumer Choice
Increased price sensitivity: Price hikes may lead some price-sensitive consumers to switch to other alternatives or reduce their usage frequency, affecting the market demand structure.
Brand differentiation intensifies: Leading brands, relying on their technological advantages and scale effects, may absorb some cost pressures through internal adjustments to maintain price stability. However, small and medium-sized brands may face greater pressure to raise prices, and their market share may further concentrate in the top players.
Industry Pattern and Long-term Impact:
The increase in market concentration: The collection of consumption tax has accelerated the industry reshuffle. Small and medium-sized manufacturers have withdrawn from the market due to cost pressure, while leading enterprises have consolidated their advantageous positions through technological upgrades and diversified layouts.
Increased compliance costs: Import enterprises need to invest more resources to meet regulatory requirements, such as technical reviews and packaging labels, further pushing up operating costs.