President ratifies cigarette tax, fee hike from Friday
President Mohamed Muizzu on Thursday ratified a bill that raises import duties and taxes on cigarettes, bidi, and other tobacco products from Friday.
The Import Duty Act amendment, proposed by the government in early October and passed by the parliament on Thursday, is now in effect.
However, relevant regulations must be drafted, amended, and gazetted within 30 days of the bill's enactment.
The new legislation introduces the following changes to import duties and taxes on tobacco products:
-
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.
-
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.
-
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 retailed 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.
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.
