Wiadomoscihandlowe reported that the Polish Ministry of Finance has decided to exclude e-cigarette devices from the excise tax framework due to various technical challenges. This decision allows for the timely implementation of increased excise taxes on tobacco products and their alternatives, scheduled to take effect on January 1, 2025.
Why E-Cigarettes Are Excluded from Poland’s Excise Tax
The Polish Ministry of Finance cited several reasons for excluding e-cigarette devices from the excise tax framework:
- Technical Complications: E-cigarette devices were previously categorized as non-excise products, and imposing taxes on them posed several technical difficulties, particularly concerning taxation processes and labeling requirements. As a result, these devices will continue to be treated as non-harmonized products and will follow existing procedures for suspending excise duties, production in tax warehouses, and domestic transport via the EMCS PL2 system.
- System Upgrades: Applying excise tax to e-cigarette devices would require major adjustments to the EMCS PL2 and SZPROT PLUS systems. Additionally, businesses involved in the e-cigarette industry would need to acquire excise tax licenses and provide tax guarantees, further complicating the taxation process.
- European Commission Compliance: The Minister of Development and Technology recommended notifying the European Commission about provisions relating to the taxation of e-cigarette devices, as required by EU regulations. This compliance is necessary before any further tax measures are introduced.
- Prioritizing Tobacco Products: Excluding e-cigarette devices from the excise tax allows the Ministry to focus on implementing new excise tax rates on tobacco products and alternatives by January 1, 2025, with full application beginning on March 1, 2025.
Background on the Excise Tax Amendment
The Polish Ministry of Finance’s draft amendment to the Excise Duty Act initially proposed adjustments to the excise rates on:
- Tobacco products,
- Heated tobacco alternatives,
- E-liquids.
The proposed amendments spanned 2025 to 2027 and included a 75% excise tax increase on e-cigarettes if passed. E-liquids were also to be subjected to an annual excise stamp validity period. However, due to the complexities surrounding the taxation of e-cigarette devices, the Ministry decided to separate this issue from the current tax amendment process.
Next Steps for E-Cigarette Taxation
The excise tax project was submitted to the Polish Cabinet’s Standing Committee (SKRM) on September 12, 2024, for further review. The issue of e-cigarette taxation will be revisited in future legislative sessions, allowing more time to address the technical challenges. Additionally, the European Commission will be notified to ensure compliance with EU regulations before further actions are taken.
This decision aligns with recommendations from the Minister of Development and Technology, focusing on compliance with EU rules while postponing immediate taxation on e-cigarette devices.
FAQs
Why did the Polish Ministry of Finance exclude e-cigarette devices from excise tax?
The Ministry excluded e-cigarette devices due to technical challenges related to implementing taxation, including issues with the EMCS PL2 and SZPROT PLUS systems. The decision also allows the Ministry to focus on timely execution of new excise taxes on tobacco products and their alternatives.
How are e-cigarette devices categorized under the current tax system?
E-cigarette devices are classified as non-harmonized products, meaning they are not currently subject to excise taxes. However, they must follow procedures for excise duty suspension, production in tax warehouses, and domestic transport through the EMCS PL2 system.
When will the new excise taxes on tobacco products take effect?
The new excise tax rates on tobacco products and alternatives will take effect on January 1, 2025, with full application starting on March 1, 2025. The Polish Ministry of Finance is prioritizing the implementation of these tax increases.
What did the original excise tax proposal include?
The original proposal included tax increases on tobacco products, heated tobacco alternatives, and e-liquids from 2025 to 2027. It proposed a 75% excise tax increase on e-cigarettes and introduced an annual excise stamp validity period for e-liquids.
Will e-cigarette devices be taxed in the future?
Yes, the issue of e-cigarette device taxation will be revisited. The Ministry of Finance has added the matter to the legislative planning agenda, allowing time to resolve the technical challenges before implementing a future tax on these products.
