Parliament passes cigarette tax, fee hike from Friday
Relevant regulations must be drafted, amended, and gazetted within 30 days of the bill's enactment.
Parliament on Thursday passed a bill that raises import duties and taxes on cigarettes, bidi, and other tobacco products.
The newly approved Import Duty Act amendment, proposed by the government earlier this month, will go into effect Friday. This legislative shift marks a major step in the government's anti-tobacco agenda.
The new legislation introduces the following changes to import duties and taxes on tobacco products:
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Increase in specific import duty: The specific import duty on cigarettes and bidis will rise from MVR 3 to MVR 8 per cigarette, an increase of MVR 5. This adjustment is expected to drive up the retail price of cigarettes significantly.
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Higher ad valorem rate: The ad valorem rate on cigarettes and other tobacco products will double, increasing from 50% to 100%. This change further intensifies the cost burden on tobacco importers and, ultimately, consumers.
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Impact on retail price: The combined effect of these tax hikes will likely add over MVR 100 to the price of a standard pack of cigarettes, which currently retails for slightly over MVR 100. This steep increase aims to curb tobacco use in the country.
The bill was initially sent to the finance committee and the economic committee sub-committee, which reviewed the proposed changes and made minor amendments. However, Inguraidhoo MP Ibrahim Falah, representing the PNC, moved additional amendments to the bill before its final review.
The full parliamentary committee passed the bill with the amendments intact, and the vote in the parliament was largely in favour of the new tax regime:
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Votes in favour: 71
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Abstentions: 8
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Votes against: None
Notably, members from the Maldivian Democratic Party (MDP) expressed dissent by abstaining from the vote, signalling their concerns but ultimately not blocking the passage of the bill.
For the bill to become fully enforceable, it must be ratified by the president. Additionally, relevant regulations must be drafted, amended, and gazetted within 30 days of the bill's enactment.
In conjunction with the tax increase on traditional tobacco products, an amendment to the Tobacco Control Act is also under consideration. This amendment, currently in the committee stage, aims to impose a comprehensive ban on vaping products. If passed, this law will prohibit the use, possession, manufacture, sale, advertising, and free distribution of vaping devices in the Maldives starting from December 15.
