According to foreign reports, earlier this week, the Canadian federal government released its proposed budget for 2021. If approved, Canada will implement a consumption tax on all e-cigarette products in 2022.
The consumption tax is paid by the enterprise, not by the consumer, which means that if it is just an ordinary e-cigarette user, there is no need to pay tax. But it does mean that the use of electronic atomization products may become more expensive in the future.
New taxes on e-cigarettes will apply to e-cigarette oils, whether they contain nicotine or not. As a result of its current tax under the consumption tax act, Canada's Hemp aerosol products will be exempt from the new tax.
The government proposes to levy a consumption tax of US $1 per 10 ml of e-cigarette oil, and calculate the consumption tax according to the volume of the smallest container containing the liquid.
The government is inviting comments from the Canadian e-cigarette industry and other stakeholders by June 30 to submit written comments.
The following is a detailed description:
Consumption tax on steam products: the 2021 budget proposes to levy a tax on e-cigarette products in 2022 by introducing a new consumption tax framework.
As part of the current consumption tax law of 2001, it is proposed to introduce a new e-cigarette consumption tax framework, which currently imposes consumption tax on tobacco, wine, spirits and marijuana products. The new tariff is only applicable to the electronic cigarette oil produced or imported from Canada and intended to be used in electronic cigarette equipment in Canada. These oils usually contain vegetable glycerin, as well as any combination of propylene glycol, flavoring, nicotine or other ingredients, all of which must comply with Health Canada regulations. The new tariffs will apply to these products, whether or not they contain nicotine. Marijuana based electronic aerosol products will definitely not be subject to the framework, as they are already subject to a marijuana consumption tax under the act.
The proposed framework would impose a single uniform tax rate for every 10 milliliters (ML) of atomized oil or part of it in a direct container (i.e., the container containing the liquid itself). The rate is approximately $1 per 10 ml or less, and the excise tax will be calculated and levied based on the volume of the smallest direct container containing the liquid.
If the retail package contains four individual 1.0 ml cartridges, each cartridge will be considered as a separate container for duty purposes. The tariff will be calculated based on the amount of oil in each individual container (i.e. US $1.00 per container, total of US $4.00 for retail packaging) rather than the total amount of oil in the package.
A larger capacity (for example, a 30 ml container) will be subject to a consumption tax of $3.00, while a 100 ml container will bear a consumption tax of $10.
In general, the flat fee should be charged at the time of packaging or import. The last Federal Licensee in the supply chain to package e-cigarette products for final retail, including e-cigarette stores with excise license (if applicable), will be responsible for the applicable excise tax.
The Canadian Revenue Agency (CRA) will be responsible for managing and implementing the new excise framework for e-cigarette products, including ensuring compliance with the general application and administrative rules contained in the act. The Canadian Border Service Agency (CBSA) will be responsible for the management and implementation of the border framework. In order to promote compliance with the tax on e-cigarette products, penalties and criminal provisions similar to those on alcohol, tobacco and marijuana will be applied.
Licensing and registration requirements:
Manufacturers and importers of taxable e-cigarette products will be required to obtain a license for their activities from CRA. This will include any e-cigarette store that wishes to obtain and then use duty-free bulk e-cigarette products to mix or manufacture new products on site for immediate or subsequent sale to end customers, which will be subject to the tax rate.
Applicants who wish to obtain a license from the CRA will meet a number of standards similar to those for other tax deductible products already listed in the act and its regulations, such as no measures taken to deceive the government in the past five years. Licenses for manufacturers and importers of e-cigarettes will be issued for up to three years and will not be renewed automatically.
Personal use: no registration and license will be required for individuals who use the blend for their personal consumption.