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A proposal to tax vapes, e-cigarettes and related devices in Argentina is considered a positive sign that the South American country may be considering formal regulation in the sector – even though the overall bill did not have enough support to pass through the legislative process this time around, members of the local industry told ECigIntelligence.
Since 2011, the sale and promotion of vapes has been banned in Argentina, following a ruling by the National Administration of Drugs, Foods and Medical Devices (Anmat). In 2023, the Argentine Ministry of Health issued a decree to prohibit the import, distribution, sales and promotion of heated tobacco products, deepening restrictions in the industry.
In December, however, Argentina’s new president, Javier Milei, presented a massive package of reforms – known as the Omnibus Law – which includes a legislative proposal that seeks to establish a 20% tax on “electronic cigarettes, vapes and other devices duly authorised for sale that administer nicotine without tobacco, including cartridges and liquids, rechargeable or not”.
The Omnibus Law, which included widespread legislative changes that sought to deregulate government sectors to foment economic growth and slow the country’s historically high inflation, was initially approved by the National Congress of Argentina on 2nd February.
However, after discussing the bill article by article, the government withdrew it due to lack of support, and it is to be reintroduced in the next parliamentary session.
It means the overall bill will have to start again from the first step. But the inclusion of the tax in the bill is, nonetheless, a positive sign for the industry and could very well feature again in the next iteration.
“I want to believe that this law will create a regulatory opportunity or the revocation of the administrative order by Anmat that bans vape sales in Argentina,” Juan Facundo Teme, president of the Argentine section of the South American vapers association, Asovape, told ECigIntelligence. “If that is the case, it would really benefit small business owners in the vaping and e-cigarette industry and create an opportunity to expand the national market.”
Lack of clarity
In the Omnibus Law, only one line was dedicated to “electronic cigarettes and other tobacco-free devices”. It explains that e-cigs, vapes and similar devices “will pay a 20 percent tax rate in addition to the respective tax base”.
The mention of vapes and electronic cigarettes appears in the section of “modifications to taxes on personal goods”, which includes several proposed duty hikes to the sales and transport of tobacco products.
“The fact that there could be a new tax applied to products – vapes and electronic cigarettes – that aren’t regulated, leaves us with a lot of uncertainty,” said Facundo Teme.
In Argentina, the use and consumption of vapes and e-cigs is legal, though sales, promotion and distribution are prohibited. This has led to the creation of an informal market for the products in the country, where an estimated 1m Argentines consume vapes and e-cigarettes.
“It’s definitely a strange move to propose a tax for something that isn’t even authorised for sales,” Facundo Teme said. “It seems like it might open the door for positive developments in the medium term, but there’s not much clarity on how the tax might be applied.”
He added that the language in the Omnibus Law proposal also failed to detail how the tax on vapes and e-cigs would be implemented.
“It’s unsure at this point if it would be a sales tax or a value-added tax, if it would apply to imported products or on the industrial side,” he said. “There are still a lot of unknowns.”
Medium-term changes
Argentina’s Omnibus Law consists of 351 pages and 664 articles, most of which seek reforms to deregulate government sectors and privatise the banking, energy and infrastructure industries to improve the flailing economy. In 2023, Argentina’s inflation rate soared by 211%.
Given that creating regulation for the e-cig and vaping industry is not seen as an immediate priority for the government, Facundo Teme says he thinks possible change to the sector would happen in the medium term.
“The Omnibus Law doesn’t propose regulation for the vaping industry, nor does it authorise the products as legal for sales,” he said. “It does create an expectation and hope that perhaps new authorities within Anmat will have a different mindset and reopen the topic for debate and potentially seek to revoke the ban.”
Facundo Teme said that members of Argentina’s vaping industry remain cautious about how the potential passage of the law would impact the sector, though the hope is that it would “open a door to regulation”.
“The liberal Milei government has said that it will prioritise open markets, and if that is the case, maybe the approval of the Omnibus Law will pave the way for regulation in the sector,” he said.
– Adam Williams ECigIntelligence contributing writer
Photo: Phillip Capper
