JTI backs unified tax on e-cigarettes

Says smugglers exploit classification loopholes

KUALA LUMPUR – A proposed unified tax rate on e-cigarettes may help plug a loophole that provides an avenue for illicit traders to misdeclare higher-taxed products, while ensuring the government collects proper revenues, JTI Philippines said.

The firm has expressed its support for the Department of Finance’s proposed Promoting Growth, Revenue, and Equity towards Socio-Economic Sustainability (ProGRESS) tax package, which would impose a single excise rate on e-cigarettes, saying the measure could curb so-called technical smuggling.

“The position of JTI Philippines is that we support this unification of a tax rate because it is to prevent smuggling and also to allow the government to gain the revenues that the fair share of revenue, what it would have gotten,” Shaiful Mahpar, corporate affairs and communications director of JTI Philippines, said.

JTI, whose regional headquarters for South Asia is in Kuala Lumpur, is the manufacturer of Winston, Camel, Mighty and Mevius cigarette brands.

Under the DOF’s proposal, a unified excise tax rate of P72.9 for e-cigarettes is proposed beginning in 2027, with five percent indexation starting in 2028.

This specific rate shall be applied per milliliter of salt nicotine, per two ml of freebase and per pack of 20s of heated tobacco products.

Several lawmakers have adopted the proposal, with varying tax rates filed in the House of Representatives.

“The reality of it, there is no way at ports for you to distinguish between what’s freebased e-liquids,” Mahpar said.

He said shipments need to undergo laboratory testing to determine the type of e-liquid, creating an opportunity for smugglers to misdeclare salt-nicotine products as freebase liquids.

These types of products currently face different tax rates, with the tax on salt-nicotine e-liquids significantly higher than that on freebase products.

“The tax rate for salt nicotine versus freebase is about eight to 10 times less,” he said, allowing illicit traders to significantly reduce their tax liabilities by declaring shipments as freebase.

A unified rate would remove the tax distinction between the two types of e-liquid and reduce the incentive to misdeclare products, JTI said.

JTI regional director for North and South Asia Valentin Dinca said any tax increase should be matched by stronger enforcement measures, as seen in the Philippines.

Revenue losses of the Philippines due to tobacco smuggling grew to P61.8 billion in 2025 from P56.3 billion in 2024, according to data provided by Euromonitor International to the European Union-ASEAN Business Council.