Juul likely to benefit from Korea’s cheap e-cigarette tax

2019.05.08 13:52:47 | 2019.05.08 15:10:34

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No.1 American e-cigarette Juul is due to arrive in Korea this month with as small tax as its size.

According to Juul Labs Korea, local subsidiary of U.S.-based electronic cigarette company, Wednesday, the cigarette tax on its liquid-type e-cigarette Juul is estimated at 1,360 won ($1.16) per a 0.7-mL pod, which is equivalent to one pack of traditional type of cigarette, excluding value-added tax. When including the value-added tax, calculated based on local market’s average price of 4,500 won per a pack of cigarettes, total tax imposed on one Juul pod would be 1,769 won, nearly half compared to 3,332 won levied on traditional type of cigarette.

Cigarette tax in Korea is imposed based on the amount of nicotine contained in tobacco. For heat-not-burn (HNB) cigarette, like Juul, tobacco consumption tax of 628 won is charged per 1 mL of nicotine plus others including individual consumption tax. This is just 62 percent of cigarette tax levied on traditional type of cigarette in Korea.

American tobacco major Philip Morris International through its local subsidiary Philip Morris Korea in May 2017 launched HNB cigarette IQOS at 4,300 won per stick but its tobacco tax was about 50 to 60 percent levied on traditional types because at that time, the country was yet to decide on the tax rate for e-cigarettes. There have been heavy complaints about the fairness in taxation, leading to Korean government revise related laws and raise cigarette tax.

It is reported that Juul Labs Korea will release its e-cigarette Juul in Korea on May 24. Juul currently accounts for about 70 percent of the U.S. liquid-type e-cigarette market.

By Sohn Il-seon and Cho Jeehyun

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