A new regulation imposing a 10% tax on electronic cigarettes or e-cigarettes has been enacted by the Indonesian Ministry of Finance, effective from January 1, 2024.  

As stipulated by Minister of Finance Regulation No. 143/PMK/2023 on the Procedures for Collecting, Withholding and Remitting Cigarette Tax, issued on December 15, 2023, electronic cigarettes are now included in the list of taxable tobacco products. 

Furthermore, the Ministry of Finance has also issued Regulation No. 191/2022, which addresses Excise Tariffs for Tobacco Products. This regulation, which also takes effect on January 1, 2024, signifies an average 10% increase in tobacco excise rates, impacting the retail pricing of various tobacco products. 

In a statement quoted by The Jakarta Post on Friday, December 29, 2023, the Finance Ministry said the regulation was aimed at providing a level playing field for all tobacco products, underlining that both the tax and excise had been imposed on conventional cigarettes since 2014.  

“In the long run, electronic cigarettes are indicated to affect [public] health, and its content falls under the category of [controlled] consumer goods,” ministry spokesperson Deni Surjantoro said, as quoted in the statement. 

Industry players have expressed opposition to the regulation, saying that the rule was poorly communicated and that it would negatively impact the industry. 

“The plan was never communicated and discussed with us before. It should be considered that the electronic cigarette industry is a new industry, and that most industry players [are] micro, small and medium enterprises,” said Garindra Kartasasmita, Secretary-General of the Indonesian Personal Vaporizer Association (APVI), as quoted by The Jakarta Post.  

It may be noted that – irrespective of the new tax regulation and despite an expected global decline in the prevalence of smoking over the next decade – a 2023 Statista Consumer Insights Report forecasts an increase in the number of smokers in Indonesia. 

According to Statista's data, the smoking population in Indonesia stood at 112 million in 2021 and is projected to rise to 123 million by 2030.