Draft amendments to rules for the implementation of tobacco products related excise duties on nicotine and nicotine-substitute solutions in vaping products

Draft amendments to rules under sections 19A and 120 – for the implementation of tobacco products related excise duties on nicotine and nicotine-substitute solutions in vaping products

Vaping will, down-the-line cost, you more as the Government has proposed a flat excise duty rate of R2.90/ml for both nicotine and nicotine-substitute solutions in Schedule 1 Part 2A of the Customs and Excise Act. This was published in the Taxation Laws Amendment Act, 2022 dated 5 January 2023. Previously, vaping products were not included.

Comments from interested parties are due date by 24 February 2023. This draft amendment was published on 3 February 2023.

The proposed rule and form amendments relate to the administration of the tax which will be implemented on 1 June 2023.

The rule amendments affect two documents: DA 260 tobacco products (SOS – Special Storage Warehouse) and DA 260 tobacco products (VM – Manufacturing Warehouse). Importers of these products will need to familiarise themselves with changes to the forms found on the SARS website link:

Draft Documents for Public Comment

The imposition of the excise duty on these products and the rate at which it would be taxed are policy decisions that were consulted through the Taxation Laws Amendment Act, 2022, process through Parliament. The current publication of the draft rules and forms are meant to elicit comments on the proposed administration and are not a re-opening of the earlier policy debate.

Some examples from the amendments are:

Rule 19A.01 clause (dd) for products classifiable under item 104.35

Amended clause: “other manufactured tobacco and manufactured tobacco substitutes; “homogenised” or “reconstituted” tobacco; tobacco extracts and “essences” deleted clause [cigarette tobacco and substitutes thereof and pipe tobacco and substitutes thereof]

and insertion in paragraph (b)(i) of the following item after item (dd):

“(ee) Products containing tobacco, reconstituted tobacco, nicotine, or tobacco or nicotine substitutes, intended for inhalation without combustion; other nicotine containing products intended for the intake of nicotine into the human body classifiable under item 104.37.”

Amendment of rule 19A.04 (CAPITAL LETTERS being the insertions into clauses)

Rule 19A.04 is amended by the substitution in paragraph (a)(ii) of the following item for item (cc):

“(cc) tobacco products-
(A) cigarettes AND STICKS, the number;
(B) [all other, the mass] LIQUIDS, THE VOLUME IN MILLILITRES;
(C) ALL OTHERS, THE MASS IN KILOGRAMS;”

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