Recently, the Canadian Judicial Law website promulgated the newly revised Consumer Tax Law of 2001 to tax e-cigarette products. The Canada Revenue Agency (CRA) is responsible for administering and enforcing the excise tax framework requirements for e-cigarette products. The tax requirement applies to e-cigarette products, whether or not they contain nicotine.
This issue introduces you to the obligations related to the import of electronic cigarettes in Canada.
Tax on e-cigarettes
(a) Pursuant to Section 158.57 of the Regulations, effective October 1, 2022, a tax is imposed on e-cigarette products imported into Canada, payable by a “designated person” in Canada to the Border Services Agency (CBSA) at the time of importation.
b. Under section 158.47, an e-cigarette product imported into Canada must be packaged and affixed with an e-cigarette excise duty stamp before it can be released into the duty-paying market under the Customs Act, and if it is not affixed with a stamp, it shall be placed in a warehouse so that it can be affixed by a “designated person”.
c. For packaged e-cigarettes that have been imported into Canada before October 1, 2022 and have a GST stamp under the Customs Act, duties will also be payable to the CBSA.
Tariff rate
a. For each smoker or direct container that has been pre-filled with e-cigarette liquid, the first 10mL of e-cigarette liquid shall be charged 1 Canadian dollar per 2mL, and the part less than 2mL shall also be 1 Canadian dollar; The amount over 10mL is charged at $1 per 10mL, and the amount under 10mL is also charged at $1.
b. For the e-cigarette liquid that is not filled in the smoker or direct container, the first 10mL will be charged 1 Canadian dollar per 2mL, and the part less than 2mL will also be 1 Canadian dollar; The amount over 10mL is charged at $1 per 10mL, and the amount under 10mL is also charged at $1.
Marking requirement
a. Packages of e-cigarettes manufactured outside Canada and intended to be shipped to a GST warehouse or customs bonded warehouse for temporary storage shall be printed or posted with the following bilingual sign: “Unpaid Tax”.
b. The marking specifications are:
Text color: 100% print black;
Text font: Helvetica, min. 36 min.
Size: min. 7 cm x19 cm;
Frame: min. 1.5 LBS.
If the container is too small to be labeled 7 cm x19 cm, the above dimensional specifications do not apply.
c. The Canada Revenue Agency issues an e-cigarette excise duty stamp to “designated persons” in its territory for use on e-cigarettes, covering the mark to indicate that these e-cigarette products have paid the e-cigarette duty and additional e-cigarette tax (if applicable) in accordance with the law.
Transitional rule
a. Effective October 1, 2022, e-cigarettes manufactured in Canada or imported into Canada must already bear an e-cigarette excise duty stamp.
b. Allow e-cigarettes manufactured in Canada or imported into Canada before October 1, 2022, to circulate and sell until December 31, 2022, inclusive.
c. From January 1, 2023, no person shall possess or sell a packaged e-cigarette product without a GST stamp unless expressly permitted by the Act.
The requirement to tax e-cigarettes is for “designated persons” in Canada, and the overseas manufacturer should cooperate with the importer to complete the product packaging marking requirements or obtain a GST stamp from the “designated person” to assist in affisting the stamp. At present, various countries have introduced tax policies successively, indirectly increasing the price of products in the export market, which is bound to have a certain impact on the export of electronic cigarettes in our country.