SEATCA TOBACCO TAX PROGRAM

introduction

While some countries have made significant progress over the past several years in formulating and implementing tobacco tax policies according to the WHO FCTC Article 6 Guidelines, the region as a whole is advancing very slowly. Most countries lack a long-term vision when it comes to the tobacco tax policy, and therefore do not evaluate nor update their policies regularly according to their social and public health targets. The obstacles to the compliance with the WHO FCTC Article 6 are complex tobacco tax structures, small or non-existent tax increases that fail to decrease the affordability of cigarettes, weak tax administration, and tobacco industry interference in both tobacco tax policy formulation and administration

Tobacco tax burden as percentage of cigarette retail price in ASEAN

Thailand currently has the highest tax burden as a percentage of retail price (78.6%), followed closely by Philippines (71.3%) and Singapore (67.5%)

* There are no licensed tobacco importers and retails in Brunei since May 2014. Hence, there are no cigarettes being sold legally in the country.

**The estimate was calculated based on premium cigarette brand.

Cigarette tax system in ASEAN region

Type of Tax Applied
countries
Excise Rate
VAT/GST
Import Tariffs
Others
Specific Tax
Brunei Darussalam
BND 0.25/stick
N/A
N/A
N/A
Indonesia
IDR 80-380/stick, (multiple tiers
8.40%
0% from ASEAN plus China 40% from outside ASEAN plus China
Local cigarette tax 10% of excise tariff
Philippines
PHP 21 or 28 per pack (2 tiers)
12%
3-10%
Single uniform rate by 2017, then annual 4% increase starting in 2018
Singapore
SGD 0.388/stick
7%
N/A
N/A
Ad Valorem Tax
Cambodia
15% of 90% of invoice price
10%
7-35% plus 10% import VAT
Public lighting tax 3% of invoice value, Profit tax 20% of Profit, Turnover tax 2% of invoice value
Myanmar
120% of retail price (Commercial tax)
none
30% on CIF
1% special excise duty, profit tax, income tax
Vietnam
65% of ex-factory price (75% of ex-factory price in January 2016)
10%
30-135%
N/A
Mixed System
Lao PDR
15-30% of production cost, plus LAK 500 additional specific tax
10%
Flat rate USD 0.40/pack
Royalty fee 5% of production cost
Malaysia
MYR 0.25/stick specific tax and 20% ad valorem tax
5%
MYR 0.20/stick
N/A
Thailand
87% of ex-factory price or THB 1/gram, whichever value is higher
7%
Exempted but other local taxes are applied
Local tax THB 0.093/- stick, ThaiHealth tax at 2% of excise, and TV tax at 1.5% of excise

Generally, cigarette prices remain affordable and relatively low throughout the region, but particularly in Cambodia, Lao PDR, and Vietnam (less than USD 1 per pack) where regular tax increases are needed to keep pace with economic and income growth.

Cigarette affordability: Relative Income Prices (RIP)*
of cigarettes in ASEAN