Local governments in China are planning to attract vape factories and levy a tax on e-cigarette production in a bid to boost local revenue.
On the one hand, the taxation of e-cigarette factories can increase the local fiscal revenue; on the other hand, vape factories can also obtain the policy convenience of local government and obtain the production capacity license. Many local governments have begun to ask e-cigarette manufacturers to set up factories. Some local governments are even willing to offer free land, invest money, or offer preferential local policies to win e-cigarette companies to set up factories.
Even before the tax on e-cigarettes was introduced in China, many local governments asked relevant people what policies would be more favorable to introduce e-cigarette factories. Now, with the introduction of the tax law on e-cigarettes, more local governments have asked in the past.
At present, the proportion of vape tax in China is 36% for the industry and 11% for the supply link. The tax levied on the process link is levied by the local locality, and the tax levied on the circulation process of e-cigarette is levied by the locality of consumption. Local governments in China prefer domestic e-cigarette brands, which pay more taxes than their export counterparts. After the local consumption tax is collected, other taxes paid to the provincial Party Committee will go to the central Treasury. The central government will make a large proportion of transfer payments to the local government, and the proportion of transfer payments varies with different regions.
For example, the list of local tax payers often includes the cigarette factory and the local tobacco retail company. E-cigarettes also belong to the food industry, and a large percentage of the tax paid by the local government will be returned.
Traditional cigarettes in China are a done deal, but the e-cigarette industry is a new type of industry that is still developing, providing opportunities for local governments. Now local governments are backing e-cigarette factories, which could have an impact on the current proportion of e-cigarettes.
Currently, according to China’s approved sales quota of e-cigarettes, the tax revenue is about 10 billion yuan, less than 1% of the tax revenue of traditional cigarettes. However, the e-cigarette industry is still in continuous development, and there are some minor difficulties at present, but there is also a great space for development in the future. In the long run, vaping businesses will contribute more tax revenue to boost business.
Now, many local governments have started to introduce e-cigarette factories, giving a lot of preferential policies.