Committee approves import duty hike on cigarettes and vape

Parliament’s Whole House Committee, on Wednesday, approved the amendments submitted by the government which seeks to double the import duty on cigarettes and vape as decided by President Dr. Mohamed Muizzu.

The amendments were proposed to the Import/Export Act and Goods and Service Tax Act which seek to increase the tax on cigarettes and other tobacco products, as well as the tax on e-cigarettes and vapes until a planned ban kicks in. They include:

• The specific rate of import duty on cigarettes and beedi will be increased from MVR 3 to MVR 8.
• The ad valorem tax on cigarettes and beedi will be increased by 50 percent

The amendments were approved by a Parliament sub-committee. However, PNC’s Parliamentary Group leader Ibrahim, Inguraidhoo MP Ibrahim Falah proposed an additional change to the amendment; a 50 percent increase of the duty levied on heated tobacco products and MVR 8 from each stick.

The change was approved with the vote of 69 MPs. Although no MP voted against the change, two MPs abstained from voting.

Whole Committee approved the amendment to the Import/Export Act with the votes of 68 MPs. Six MPs voted against the amendment.

The amendment to the Goods and Service Tax Act was also passed with the votes of 68 MPs. 10 opposition MPs voted against the amendment.

The amendments are still subject to a floor vote to be passed. Once passe, they will only come into force once ratified by the President.

Revenue earned from tobacco products is expected to see a significant increase with these changes.