Vietnam will implement a 50% preferential tax rate on the import of electronic cigarettes and raw materials from July 15, 2023

According to Vietnamese media reports, Vietnam's Decree No. 26/2023/ND-CP released on May 31st will officially come into effect on July 15th. The General Administration of Customs has requested the customs departments of various provinces and cities to pay attention to the preferential import tax rate of 50% for Group 24.04, which includes tobacco leaves, reconstituted tobacco leaves, nicotine or tobacco substitutes or raw materials used for smoking but not burning, as well as products used for human consumption of nicotine.
In fact, the Vietnamese e-cigarette market is facing the influence of various forces. The relationship between preferential tariffs and the consumer market may not be significant.
Although there was no previous ban on e-cigarettes in Vietnam, the qualification for importing e-cigarettes in Vietnam was only granted to the Vietnamese National Tobacco Corporation (Vinataba). In other words, it currently appears that the biggest beneficiaries of this preferential tax rate are still Vinataba, rather than private companies. The Vietnam Tobacco Control Foundation (VNTCF), funded by tobacco companies and responsible for the regulation of e-cigarettes, has formed a major force supporting e-cigarettes.
Secondly, Vietnamese public health regulatory agencies have always been opposed to e-cigarettes. Mainly led by the Vietnamese Ministry of Health, advocating for an absolute ban on e-cigarettes. Even on May 25th of this year, Vietnam approved a National Tobacco Hazard Prevention and Control Strategy, with the core focus being "preventing the use of e-cigarette products in the community".
But in recent years, the electronic cigarette market in Vietnam has developed rapidly. According to data previously released by Vietnamese media, the proportion of e-cigarette users increased by over 36 times between 2015 and 2020; More than 1.1 million people in Vietnam currently use e-cigarettes.
In the previous Ge Wu consumption tweet, "Regarding brands such as Yueke and OXVA, Vietnamese official media exposed illegal sales of e-cigarettes around schools." It can be seen that many Chinese e-cigarette brands have entered the local market in Vietnam.
In addition, Vietnam has also attracted some e-cigarette companies to invest in building factories. On June 1st, Kesen Technology announced in a notice that it had completed the registration and filing procedures for establishing a company in Vietnam and received permission documents such as the "Notice on Filing Overseas Investment Projects" issued by relevant departments. The first mass production project of the Vietnamese factory is heating non combustible e-cigarettes, and other reserve projects are also being followed up.
Based solely on the current event of launching preferential tax rates on July 15th, it cannot be inferred that the Vietnamese e-cigarette consumption market is about to begin rapid development, which may be more reflected in the reduction of production costs for supply chain enterprises.