Tobacco taxes can therefore
have large aggregate benefits for public health and
socio-economic development, primarily through
healthier and more productive populations and
reduced healthcare costs, reducing poverty, and
providing a reliable source of government revenues.
For these reasons, tobacco tax increases are
described as a win-win policy measure, i.e. a highly
cost-effective WHO “best buy” public health
intervention and a reliable source of domestic
financing.
The World Bank has recommended that the total
tax burden should be 66% to 80% of the retail
price, and the WHO has recommended that at least
75% of the retail price should be excise. The
current global guidance for tobacco taxation,
however, remains to be WHO FCTC Article 6 and
its implementation guidelines (adopted by the
WHO FCTC COP in 2014), which recommend
that governments should adopt long-term tax and
price policies that meet both their public health and
fiscal needs.
This means applying specific or mixed (specific and
ad valorem) taxes on all tobacco products, taxing all
tobacco products in a similar way (to reduce the
potential for product substitution), and regularly
increasing tax rates to continually reduce the
affordability of tobacco products. This also means
strengthening tobacco tax administration
(licensing, warehousing, anti-forestalling, fiscal
markings, and enforcement), considering
dedicating tobacco tax revenues to tobacco control
programmes, and prohibiting or restricting
tax/duty-free sales of tobacco products.
This chapter provides an overview of the tobacco
tax situation in ASEAN countries, where tax
policies have been strengthened in some countries,
but require more improvements in others.
Thailand has the highest tax burden as a percentage
of retail price (81.3%), followed closely by
Singapore (70.7%) and Indonesia (66.8%). These
countries are good examples where tax increases
have contributed to higher tobacco tax revenues
and a decline in smoking prevalence rates observed
in Thailand and Singapore. Most countries also do
not have any long-term tobacco tax policies with
regularly evaluated fiscal and public health targets.
Cigarette prices remain affordable and relatively
low throughout the region, particularly in
Cambodia, Lao PDR, Myanmar, and Vietnam (less
than USD 1 per pack) where regular tax increases
are needed to keep pace with economic and income
growth.
In the case of Lao PDR, the government’s lopsided
Investment License Agreement (2001-2026) with
Imperial Brands prevents the Lao government from
benefiting, as the government continues to lose
millions in tobacco tax revenues (see page 54) while
being unable to reduce tobacco use.
Cigarettes are sold less than USD 1 per pack in Lao PDR.
Generally, cigarette prices remain affordable and relatively low throughout the region, but particularly in Cambodia, Lao PDR, and Vietnam (less than USD 1 per pack) where regular tax increases are needed to keep pace with economic and income growth.
Affordability of the most sold brand of cigarettes (2022), globally
In most countries, cigarettes are still affordable.
- Affordable cigarettes percentage
- <1
- 1-5
- 5.1–10
- 10.1–15
- 15.1–20
- 20.1–25
- >25
| COUNTRY | % of GDP per capita* |
|---|---|
| Philippines | 7.11% |
| Myanmar | 6.88% |
| Indonesia | 4.98% |
| Malaysia | 3.41% |
| Cambodia | 2.82% |
| Thailand | 2.67% |
| Lao PDR | 2.46% |
| Vietnam | 2.44% |
| Singapore | 1.31% |
*% of GDP per capita required to purchase 2000 cigarettes of the most sold brand. The higher the percentage, the less affordable cigarettes are.
Relative Income Prices (RIP)* of cigarettes in ASEAN
- The lower the RIP, the more affordable cigarettes are.
- Cigarettes have become more affordable in all ASEAN countries between 2000-2021, particularly in Lao PDR and Vietnam.
- The RIP in the Philippines showed sharply reduced affordability in 2014 and in 2021, preceded by major tax increases in 2013 and 2020.
*Relative Income Price (RIP) refers to percentage of per capita GDP required to purchase 100 packs of cigarettes.
Tobacco industry profit in global market (2017 – 2023)
*The tobacco industry profit in 2022 and 2023 is the forecast data.
**No data available in 2023.
***An additional 8 facilities produce heated tobacco products, and 14 other facilities produce other tobacco and nicotine products for a total of 53 factories.
Current adult smokers who attempted to quit in the past 12 months because of high price of cigarettes
Tobacco tax burden as percentage of cigarette retail price in ASEAN
WHO recommends that excise tax be at least 75% of the retail price.
*here are no licensed tobacco importers and retailers in Brunei since May 2014. Hence, there are no cigarettes being sold legally in the country.
**In Lao PDR, it was estimated total tax incidence (15.4%) and excise tax share (6.3%).
***The estimate was calculated based on premium cigarette brand/most sold brand.
Cigarette tax systems in ASEAN
| Country | Excise Rate | VAT | Import Tariffs | Others | |
|---|---|---|---|---|---|
| Specific Tax | Brunei | BND 0.50/stick | None | None | N/A |
| Indonesia | IDR 118–1,193/stick (8 tiers) | 9.9% | 0–5% from ASEAN and China; 40% from outside ASEAN plus China | Local cigarette tax (10% of excise tariff) | |
| Malaysia | MYR 0.40/stick | 10% * | MYR 0.20/stick | N/A | |
| Myanmar | MMK 10–27/stick (4 tiers) | N/A | 30% on CIF |
|
|
| Philippines | PHP 60.00/pack on 1 January 2023; and 5% annual increase beginning on 1 January 2024 | 12% | 0%–10% | N/A | |
| Singapore | SGD 0.491/stick | 8% | None | N/A | |
| Mixed System | Lao PDR |
|
10% | 72% |
|
| Thailand |
|
7% | The rate depends on the trade agreement |
|
|
| Ad Valorem Tax | Cambodia | 20% of 90% of invoice price | 10% |
| Public lighting tax (5% of invoice value),*** Profit tax (20% of profit), Turnover tax (2% of invoice value) |
| Vietnam | 75% of ex-factory price | 10% |
|
Compulsory contribution to Vietnam Tobacco Control Fund (VNTCF): 2% of excise tax |
*In Malaysia, a tax rate of 10% sales and services tax (SST) was applied on all goods in September 2018.
*In Lao PDR, based on the new tax law passed in 2016, the excise tax rate should be 15 - 30% (2016-2017); 45% (2018-2019), and 60% (2020 onwards). However, the tax rate is not enforced due to the unfair Investment License Agreement (ILA) with the tobacco industry signed in 2001. The tobacco industry pays 15% of the production cost only. Lao Tobacco Limited (LTL) has stopped paying a specific tax LAK 600 per pack since September 2019. The Ministry of Finance can collect only LAK 200 per pack from imported cigarettes sold in the country.
*In Cambodia, the Ministry of Economy and Finance (MEF) developed a sub-decree to increase public lighting tax from 3% to 5%. The sub-decree is enforced by 1 January 2024 after approval from the Council of Ministers.
Implementation of FCTC Article 6 Guidelines
While some countries have made significant progress in implementing tobacco tax policies, the region as a whole is advancing very slowly.
Indonesia, Myanmar, Philippines and Singapore have regular adjustment processes or procedures for periodic revaluation of tobacco tax levels.
Lao PDR, Myanmar, Philippies and Thailand have long-term policies on the tobacco taxation structure with regular monitoring and adjustments.
Brunei, Indonesia, Philippines, Singapore and Thailand had tax increases that are discouraging consumption.
Lao PDR, Thailand and Vietnam dedicate tobacco tax revenues to tobacco control/health promotion programmes.
Brunei and Philippines have a procedure/policy that protects tobacco tax and price policies from commercial and other vested interests of the tobacco industry.
In Malaysia, an excise tax of 10% ad valorem is applied on all smoking
devices_electronic cigarettes, electronic heated tobacco product, and traditional tobacco devices such as
hookah/shisha and smoking pipes.
In addition, liquid or gel used for electronic cigarette was subjected to an ad valorem sales tax of 10% and
a specific excise duty of MYR 0.40 (USD 0.08) per millilitre of e-liquid
starting 1 January 2021 (for non-nicotine) and 1 April 2023 (for nicotine).
In Malaysia, there has been no tax increase on tobacco since 2015 following statements from the tobacco industry that a tax increase will worsen smuggling.
In Indonesia, while value-added tax (VAT) for all consumer products is 10%, cigarettes have been given a discount for many years at only 8.4%. In 2015, the VAT for tobacco was raised slightly to 8.7%. The government continues to accommodate demands from the tobacco industry that delay the regulation of tobacco as seen in the decades-long reduction in the number of cigarette tax tiers.
Thailand has also awarded tax exemption for native tobacco leaves, however the Department of Excise has started to collect tax on native tobacco leaves since 2017 according to the Excise Act 2017. In Cambodia, export tax was exempted for tobacco producers exporting up to 3,000 tons of dried tobacco per year to Vietnam duty-free in 2019 and 2020.
Tobacco tax administration in ASEAN
| Authorization/licensing | Brunei* | Cambodia | Indonesia | Lao PDR | Malaysia | Myanmar | Philippines | Singapore | Thailand | Vietnam |
|---|---|---|---|---|---|---|---|---|---|---|
| Requires a license or control system on the manufacture and import or export of tobacco products. | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ |
| Have licensed wholesaling, brokering, warehousing or distribution of tobacco and tobacco products. | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ||
| Have enforced a license system on retailing of tobacco products. | ✔ | ✔ | ✔ | ✔ | ||||||
| Have a control or license system for tobacco farmers and producers. | N/A | ✔ | N/A | ✔ | ✔ | |||||
| Requires license for transporting of commercial quantities of tobacco products. | ✔ | ✔ | ✔ | ✔ | ✔ | |||||
| Requires license for manufacture, import or export of tobacco manufacturing equipment. | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ||
| Requires license for transporting of tobacco manufacturing equipment. | ✔ | ✔ | ✔ | ✔ |
*Since May 2014, there has been no licensed tobacco importer, although the license fee for tobacco importers and wholesalers is USD 3,700 (BND 5,000)/year since 2015.
Thailand enforces a license or control system on the whole tobacco supply chain. All other countries in ASEAN require licensing for only some parts of the supply chain, thereby allowing loopholes for tax evasion and illicit trade.
Tobacco tax administration in ASEAN
| Country | Cost of License (USD/year) |
|---|---|
| Brunei | 442 (BND 600) |
| Cambodia | No |
| Indonesia | No |
| Lao PDR* | Yes |
| Malaysia** | 32 (MYR 150) |
| Myanmar | No |
| Philippines | No |
| Singapore*** | 295 (SGD 400) |
| Thailand**** | 2.82 – 14.13 (THB 100 – 500) |
| Vietnam |
Fee for assessment and recognition:
|
*In Lao PDR, Ministry of Industry and Commerce is in the process of developing a ministerial regulation on licensing for the distribution and trade of tobacco products.
**In Malaysia, the licensing fee of MYR 150 is enforced starting January 2024.
***In Singapore, a new license fee is SGD 340 and SGD 60 for admin fees and SGD 300 for annual renewal fee.
****Thailand has two types of tobacco retail licensing: VAT (THB 500/year) and non-VAT (THB 100/year)
Tax all tobacco products: No duty-free import allowance
| Country | Duty-free Allowance in the Region |
|---|---|
| Brunei* (since 2010) | No duty-free concession on all tobacco products |
| Cambodia | 200 cigarettes or 50 cigars or 250 grams of chopped tobacco |
| Indonesia | 200 cigarettes or 25 cigars or 100 gm of rolling tobacco |
| Lao PDR | 200 cigarettes or 50 cigars or 250 gm of tobacco |
| Malaysia** | 200 cigarettes or 225 gm of tobacco |
| Myanmar | 400 cigarettes, 100 cigars or 250 gm of tobacco |
| Philippines*** | 400 cigarettes |
| Singapore* (since 1991) | No duty-free concession on all tobacco products |
| Thailand | 200 cigarettes or 250 gm of tobacco or all types combined |
| Vietnam | 200 cigarettes or 20 cigars or 250 gm of shredded tobacco |
*Tobacco tax needs to be paid on all tobacco products upon arrival in Brunei and Singapore.
**Malaysia taxes cigarettes and tobacco products sold at retail in all duty-free islands and free zones effective 1 January 2021.
***Philippines applies the excise tax to tobacco products sold in duty-free stores since 2013.
All countries should follow the lead of Brunei Darussalam and Singapore that prohibit duty-free tobacco sales, or of Malaysia and the Philippines that impose excise tax on tobacco products sold in duty-free stores.
Forgone cigarette tax revenues in selected ASEAN countries
If the governments of Cambodia, Indonesia, Lao PDR, Myanmar and Vietnam had implemented the recommended tax reforms, 1.3 million premature deaths could be prevented and an additional USD 4.81 billion in tax revenue could have been collected in these 5 countries in 2 years alone.
Thailand: Higher tax rates, higher revenues, and reduced smoking prevalence
Thailand raised its cigarette excise rates 11 times (from 55% to 87% of factory price) between 1991 and
2012, which resulted in an almost fourfold gain in revenues from THB 15.89 billion (USD 530 million)
to THB 59.91 billion (USD 2 billion) over the same period. At the same time, overall smoking
prevalence dropped from 32% (1991) to 21.4% (2011).
The Thai government further increased the tax rate to 90% in early 2016, aimed at reducing number of
smokers and raising tax revenue by about THB15 billion per annum.
Since September 2017, Thailand has applied a tiered mixed system, which is not as effective or as
efficient as a non-tiered system. Taxes on roll-your-own (RYO) tobacco also need to be increased to the
same level as cigarette taxes.
Excise tax on cigarette in Thailand
| 2018 - 2020 | 2021 - Present | ||||
|---|---|---|---|---|---|
| SRP | Ad Valorem (% of SRP) | Specific (THB/Stick) | SRP | Ad Valorem (% of SRP) | Specific (THB/Stick) |
| SRP≤60 THB/Pack | 20% | 1.2 | SRP≤72 THB/Pack | 25% | 1.25 |
| SRP>60 THB/Pack | 40% | 1.2 | SRP>72 THB/Pack | 42% | 1.25 |
Source: Excise Tax Department, Ministry of Finance, Thailand, 2023.
Singapore: Highest tobacco tax burden in ASEAN
Concerned by a slight increase in smoking prevalence from 2004 to 2010 and noting that the last tobacco excise tax increase was in 2005, the Singapore government increased tax by 10% in 2014 and 2018. This was followed by a larger increase of 15% in 2023.
| Year | Excise duty of cigarettes (SGD) | Retail price 20 sticks (SGD) | % Smoking prevalence (aged 18–69 years) |
|---|---|---|---|
| 1987 | 34 per kg | 2.80 | |
| 1990 | 42 per kg | 3.30 | |
| 1991 | 50 per kg | 3.70 | 18.3% (1992) |
| 1993 | 60 per kg | 4.90 | |
| 1995–98 | 115 per kg | 5.50 | 15.2% (1998) |
| 1998–99 | 130 per kg | 5.80 | |
| 2000 | 150 per kg | 6.40 | 13.8% (2001) |
| 2001 | 180 per kg | 6.80 | |
| 2002 | 210 per kg | 6.50 | |
| Mar 2003 | 255 per kg | 7.70 | |
| July 2003 | 0.255 per stick of < 1g | 8.50 | |
| 2004 | 0.293 per stick of < 1g | 9.50 | 12.6% (2004) |
| 2005–2013 | 0.352 per stick of < 1g | 11.90 | 13.6% (2007) |
| 14.3% (2010) | |||
| 13.3% (2013) | |||
| 2014 | 0.388 per stick of < 1g | 12.00 | |
| 2015 | 0.388 per stick of < 1g | 13.00 | |
| 2016 | 0.388 per stick of < 1g | 13.00 | |
| 2017 | 0.388 per stick of < 1g | 13.00 | 12% (2017) |
| 2018 | 0.427 per stick of < 1g | 14.00 | |
| 2019 | 0.427 per stick of < 1g | 14.00 | 10.6% (2019) |
| 2020 | 0.427 per stick of < 1g | 14.00 | |
| 2021 | 0.427 per stick of < 1g | 14.00 | 10.4% (2021) |
| 2022 | 0.427 per stick of < 1g | 14.00 | |
| 2023 | 0.491 per stick of < 1g | 15.50 |
Till March 2003, excise duty on cigarettes was by weight per kilogram of tobacco. From July 2003,
excise duty on cigarettes was revised to a unit-based (per stick) system. This change to a unit-based
system was in response to the emergence in 2000 of low-priced cigarettes that had less tobacco
content and less weight per cigarette and which, due to their price, were attracting young people to
smoke and encouraging smokers to smoke more, as evidenced in a shift in consumer behavior
pattern (sales of low-priced cigarettes increased from 6% in 2000 to 25% in 2003).
For unmanufactured tobacco and cut tobacco, the excise duty is SGD 388 per kg.
For beedies, ang
hoon, and smokeless tobacco, the excise duty is SGD 329 per kg. For all other
tobacco products, the
excise duty is SGD 427 per kg. An additional 7%
goods and services tax (GST) - on the cost,
insurance and freight incurred plus tobacco tax - is imposed on top of the excise duties.
Philippines: Impact of sin tax law
Fiscal gain: Simplified tax structure, higher tax rates, more efficient tax administration
(KIV The chart kinda confusing)
Fiscal gain: Regular adjustment to tobacco excise tax rates have increased government revenues over time (2012–2020)
Fiscal gain: Sin tax revenues earmarked for Universal Health Coverage, health facilities improvement, and Sustainable Development Goals
Share of health sector (50% of the total revenue from tobacco excise tax, 100% of the total revenue from alcohol excise tax, 100% of the total revenue from HTP/vapor products excise tax, and 50% of the total revenue from sugar sweetened beverages excise tax).
*Prior to the Sin Tax Law of 2012, there was no provision in the Internal Revenue Code of the Philippines that Health will directly benefit from the excise tax revenues on tobacco and alcohol. The Sin Tax Law was passed in 2012, and took effect in 2013.
**For 2014-2015, the primary reason in the decline is the so-called frontloading practice of the tobacco industry wherein they produce so much so that they will escape the higher tax rate the following year. Another reason is that the tobacco tax stamp is not yet mandatory so there are leakages in this period.
***For 2016, this is when Mighty Corporation was caught to be using fake tax stamps thus doing tax evasion.
****The new computation of allocation for health from sin taxes was based on Republic Act No. 11467 of 2020. In 2020, the new computation of allocation for health from sin taxes was based on Republic Act No. 11467. Share of health sector include 50% of the total revenue from tobacco excise tax, 100% of the total revenue from alcohol excise tax, 100% of the total revenue from HTP/vapor products excise tax, and 50% of the total revenue from sugar sweetened beverages excise tax.
Philippines: Distribution of incremental sin tax revenue for health
Free health insurance provided to the poorest 40% of the population. A premium/subsidy of PHP 3,600 or USD 72, per family.
*Computation includes the implementation of Doctors to the Barrios.
**Total amount includes funds generated from other source(s).
Share of tobacco-growing provinces*
*Share of tobacco-growing province (15% of the incremental revenue from tobacco taxes). There are 2 Laws that mandate the government to allocate funds for tobacco-growing provinces. These 2 Laws date back in the mid-90’s.
**The computation of the share of provinces planting Burley and Native Tobacco was amended by Republic Act No. 11346 in 2019.
Public health gain: Reduction in adult smoking prevalence (1998–2021)
Public health gain: Department of Health budget between 2010 and 2023
The Department of Health budget increased by 647% from PHP 42.15 billion in 2012 to PHP 314.7 billion in 2023.
Public health gain: Win for the poor
The share of sin tax for health was able to subsidize the annual national health insurance coverage of approximately 34.4 million members that include their dependents in 2019.
Note: Starting 2019, 100% of Filipinos have PhilHealth coverage due to the passage of the Universal Health Care Law or Republic Act No. 11223.
For more detailed information, please visit https://tobaccotax.seatca.org/ and refer to SEATCA Tobacco Tax Index: Implementation of WHO Framework Convention on Tobacco Control Article 6 in ASEAN Countries (2021), and Lost Funds: A Study on the Tobacco Tax Revenue Gap in selected ASEAN countries (2021).
100% smoke-free public places (indoor) policy in ASEAN
- 100% smoke free
- With smoking room
- Allows smoking anywhere
- With designated smoking room
Myanmar
- Airport
- Bars / Pubs
- Education Facilities
- Health Care Facilities
- Hotel
- Public Transportation**
- Universities
- Government Offices
- Workplaces
- 100% smoke-free indoor restaurant (air-conditioned or not)
Lao PDR
- Airport
- Bars / Pubs
- Education Facilities
- Health Care Facilities
- Hotel
- Public Transportation
- Universities
- Government Offices
- Workplaces
- 100% smoke-free indoor restaurant (air-conditioned or not)
Vietnam
- Airport
- Bars / Pubs
- Education Facilities
- Health Care Facilities
- Hotel
- Public Transportation
- Universities
- Government Offices
- Workplaces
- 100% smoke-free indoor restaurant (air-conditioned or not)
Cambodia
- Airport
- Bars / Pubs
- Education Facilities
- Health Care Facilities
- Hotel
- Public Transportation
- Universities
- Government Offices
- Workplaces
- 100% smoke-free indoor restaurant (air-conditioned or not)
Brunei*
- Airport
- Education Facilities
- Health Care Facilities
- Hotel
- Public Transportation
- Universities
- Government Offices
- Workplaces
- 100% smoke-free indoor restaurant (air-conditioned or not)
Philippies
- Airport
- Bars / Pubs
- Education Facilities
- Health Care Facilities
- Hotel
- Public Transportation
- Universities
- Government Offices
- Workplaces
- Allows designated smoking room inside the restaurant
Thailand
- Airport
- Bars / Pubs
- Education Facilities
- Health Care Facilities
- Hotel
- Public Transportation
- Universities
- Government Offices
- Workplaces
- 100% smoke-free indoor restaurant (air-conditioned or not)
Malaysia
- Airport
- Bars / Pubs
- Education Facilities
- Health Care Facilities
- Hotel
- Public Transportation
- Universities
- Government Offices
- Workplaces
- 100% smoke-free indoor restaurant (air-conditioned or not)
Singapore
- Airport
- Bars / Pubs
- Education Facilities
- Health Care Facilities
- Hotel
- Public Transportation
- Universities
- Government Offices
- Workplaces
- 100% smoke-free indoor restaurant (air-conditioned or not)
Philippies
- Airport
- Bars / Pubs
- Education Facilities
- Health Care Facilities
- Hotel
- Public Transportation
- Universities
- Government Offices
- Workplaces
- Allows designated smoking room inside the restaurant
*Brunei: No bars or pubs
**Myanmar: Designated smoking areas are allowed in public trains and public water transportation under the national tobacco control law but the Ministerial Notifications (2014) prohibits smoking in those forms of transportations.
Brunei: Non-smoking zones include areas within a distance of 6 meters from the perimeter of the
buildings.
Philippines: No designated smoking areas allowed within 10 meters of places where people pass or
congregate.
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