Vape will enter the era of high taxes

The reason why China's vape industry can "come back" again and again is that China ranks first in the world in terms of cigarette consumption and number of smokers. According to the official data released by China Tobacco Corporation, in 2019, the tobacco industry achieved a total industrial and commercial profit and tax of 1,205.6 billion yuan, and a total financial handover of 1,177 billion yuan. In contrast, as the Internet company that has paid the most tax in China for many years, Alibaba's total tax payment in 2018 was only 51.6 billion yuan.

In the British political satirical comedy "Yes, Prime Minister", the reason why the country cannot completely ban smoking was mentioned. According to relevant statistics, since 2001, about 6% of the country's public fiscal revenue has come from tobacco industry profits and taxes every year. At present, my country's value-added tax on vape is only 13%, which is far lower than the 56% tax rate on cigarettes in the traditional tobacco industry. Faced with a similar situation, other countries have begun to increase taxation on vape, such as South Korea, which raised the tax rate on vape from 43% of ordinary tobacco to 100%, and the U.S. House of Representatives also approved the taxation of nicotine vape in 2019 , It is estimated that in the next 10 years, vape taxation will bring 9.9 billion US dollars in revenue to the US government.

It is conceivable that with the increase of the vape tax rate, the purchase cost will also rise immediately. The vape industry, which has experienced many twists and turns, is bound to experience another round of unprecedented and violent shocks. But back to the present, the huge total number of smokers still gives capital the confidence to remain optimistic.

According to data released by the China Centers for Disease Control and Prevention, the proportion of Chinese adults who used vape in the past 30 days increased from 1.3% in 2015 to 2016 to 1.6% in 2018 to 2019, with an overall increase of only 0.3%. A small 0.3% has already bred such a huge business opportunity. Looking into the future, even if the new regulation comes a day later, investors are confident that they will enter the market the day before and make a big splash.

The huge market potential makes capital always confident. The fire is cooking the oil, the flowers are blooming, and RELX, which has been listed, has made a big splash in the capital market. From the earliest Ruyan, to the upstream industry in Shenzhen, to the new giants born now, in the past ten years, the brands have changed like a lantern, and there are not a few who have made real money.

The complexity of vape taxation is completely different from that of traditional cigarette taxation. Cigarettes are a single product, and there is no difficulty in taxation, but vape smoking sets are vape products, and its consumables are e-liquid, but e- Liquid is not simply a consumable, such as a cartridge for vape.

Vape is also divided into rechargeable electronic and disposable vape. The taxation of disposable vape is relatively easy, because disposable vape is a whole and cannot be disassembled. Similar to cigarettes, it can be thrown away after use and cannot be reused. The life of the rechargeable vape is very long, and it can even be used for several years. If you simply tax the rechargeable vape, it will not achieve the purpose of high taxation, so you must pay attention to it before taxing the vape. Clear the relationship between them and choose the best entry point.