Confusion in management over next-generation tobacco products

5,000 packs of smuggled cigarettes seized at Noi Bai International Airport

The dialogue. Photo: Q.H

These are the issuesdiscussed at the dialogue “legal framework for the next- generation tobacco in Vietnam” held by the Vietnam Law Newspaper on November 11 in Ha Noi.

Causing revenue losses

Competent forces have constantly handledcases of e-cigarette smuggling, and heated tobacco products in large quantities. However, the illegal use and trading or improper advertising fore-cigarette products in the market have caused analarming situation. According to the representative of the Tax Policy Department (General Department of Taxation), the management for heated tobacco products ande-cigarettes, especially the form of trading these products via e-commerce channels is facing many difficulties.

Because the specific regulations for these products have not yet been issued, when the policies on the management of e-cigarettes and heated tobacco products are promulgated, the General Department of Taxation will implement the tax administration for the above products in accordance with the provisions of law.

The Head of the Food Industry Department, Department of Industry (Ministry of Industry and Trade), Cao Trong Quy, said in 2019, the Hanoi Market Surveillance Department seizedover 200 e-cigarette products in 2019. HCM City Market Surveillance Department seized more than 16,000 packs of heated tobacco products.

In January 2020, the Anti-Smuggling and Investigation Department (under the General Department of Customs) seized78,800 HEETS heated cigarettes at Tan Son Nhat airport.

In April, the Hanoi Market Surveillance Department seized 39,800 Marlboro heated cigarettes.

However, the State management agencies have not had sanction forms for the next-generation tobacco products imported and traded in the market. Therefore, the management forces only handled these products in the same way as smuggled products, and there are no sanctions to handle as strong as forcigarette smuggling. In fact, it is required to have consensus on legal basis to dealt with similar cases.

“Because the management mechanism for next-generation tobacco products has not yet been issued, it leads to revenue loss as there is no legal basis to determine the product type and impose import tax and special consumption tax (currently, cigarettes are subject to a 100-135% import tax depending on the region, 75% special consumption tax and 10% VAT). Meanwhile, the heated tobacco products and e-cigarettes are high-value goods. If they are imposed as high a tax rate as the tobacco products traded in the market, there will be significant revenue from the management of these products,” Quy said.

Management policy is required

“The heated tobacco products and e-cigarettes are new products which are not specified in legal documents and management policies of the ministries and sectors. Therefore, it is necessary to carry out research to develop and promulgate a legal framework for the management for these products in Vietnam,” the representative of the Tax Policy Department said.

The e-cigarettes sold one-commerce sites. Photo: Q.H

According to Deputy Director of the Market Surveillance DepartmentNguyen Ky Minh, because there areno sanctions against next-generation tobacco products, competent agencies only handle them the same as handling goods manufactured by foreign countries, without invoices or vouchers proving the origin.

Therefore, the handling is not consistent with violations. It is necessary to issue a specific legal framework for this item to have appropriate penalties for the violations. In addition, when formulating tax policies, it is necessary to consider the current situation of smuggled next-generation tobacco products to provide the best support for the fight against smuggled products as well as state management objectives.

"Although there are no sanctions as well as a legal framework on the products, with the increase in next-generation tobacco products, the market surveillance force still bases its functions and duties to effectively implement Directive No.30 on combating tobacco smuggling,” Minh said.