Indonesia will start imposing a tax on e-cigarettes from the start of 2024 on top of the existing excise levy as it steps up efforts to limit consumption.

E-cigarettes will be taxed at 10% of the prevailing excise rate, according to a finance ministry regulation. In Indonesia, tobacco products are subject to two levies – at central and local government levels – of which 50% of the revenue is earmarked for public health services.

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The policy to make e-cigarettes less affordable in Southeast Asia’s biggest economy is in line with the World Health Organisation’s recent warning of the dangers of vaping.

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The Indonesian government has told consumers that vapes and their substances are just as bad as conventional cigarettes.

The use of vape in the country surged ten-fold in the decade to 2021, while as many as 70.2 million adults consumed cigarettes, according to health ministry’s data.

The excise on cigarettes will be increased by an average 10% next year, while that on e-cigarettes will rise by an average 15%.

Earlier this month, Indonesia’s government announced that it is overhauling its inflation basket, replacing items such as DVDs and print magazines with more commonly purchased goods such as e-cigarettes and vape liquid to gauge consumer price trends.

© 2023 Bloomberg L.P.

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