"Facing Forced Closure"... Liquid-Type E-Cigarette Store Owners Cry Out

Tobacco Business Act Amendment: Over 50,000 Won in Tax Per Bottle of Liquid
Small Business Owners: "Excessive Taxes Undermine Market Competitiveness"

Kim Kyunghee (43), who operates an electronic cigarette store in Seongdong-gu, Seoul, is deeply concerned. Her worries began after hearing the news last December that taxes on liquid-type electronic cigarettes would rise significantly due to the revision of the Tobacco Business Act. Kim said, "Once the tax is imposed, wholesale prices will increase, and I will inevitably have to purchase liquid at higher prices," adding, "To keep the business running, sellers will have no choice but to buy at high prices and sell at low prices, taking on losses."

On the 5th, a citizen is passing by an electronic cigarette store in Seongdong-gu, Seoul. Photo by Seungwook Park

Liquid-type electronic cigarette sellers are expressing frustration as these products are now classified as tobacco under the Tobacco Business Act, subjecting them to the same taxes and sales regulations as traditional tobacco. With the price of electronic cigarettes effectively rising, they point out that their price competitiveness in the market will decline, putting them at risk of going out of business.

With the revision of the Tobacco Business Act set to take effect this April, the price of liquid-type electronic cigarettes is expected to rise. Previously, tobacco was defined as the leaf of the tobacco plant, but the revised law expands the definition to include tobacco or nicotine, bringing liquid-type electronic cigarettes under the scope of the act. Online sales will be completely banned, while offline sales through unmanned vending machines and similar channels will be granted a two-year grace period.

Tobacco consumption tax, local education tax, and individual consumption tax will be applied, resulting in a tax of approximately 1,800 won per 1ml of liquid and about 54,000 won per 30ml bottle. However, to ease the burden on small business owners, the tax will be applied at 50% of the full rate for the next two years.

The revision of the Tobacco Business Act will take effect this April, and the price of liquid-type electronic cigarettes is expected to rise. Tobacco consumption tax, local education tax, and individual consumption tax will be applied, resulting in a tax of approximately 1,800 won per 1ml of liquid and about 54,000 won per 30ml bottle of liquid. Getty Images

The issue of tobacco retailer designation is also causing significant confusion in the field. According to the enforcement rules of the Tobacco Business Act, tobacco sellers must be designated as retailers by the relevant local government, and a minimum distance of 50 meters must be maintained between stores. Mr. Kim (39), who operates a store near a convenience store, complained, "There have never been any problems with starting or running my business, but now they're suddenly imposing distance restrictions and labeling my shop as illegal overnight."

On the other hand, among store owners who have received official retailer designation, there is a consensus that it is inevitable to eliminate unfairly operating stores. Kim Dohwan, Vice President of the Electronic Cigarette Association Federation, said, "Excessive taxes on liquid-type electronic cigarettes should be adjusted to a reasonable level," adding, "Stores that have not obtained retailer designation have, in effect, been distributing tobacco through loopholes. While the development of the tobacco industry is important, appropriate regulation is also necessary."