Sri Lanka has officially declared the use of electronic cigarettes (vapes) illegal, according to a recent parliamentary finance committee discussion. Authorities have already formulated a regulatory framework, and the Excise Department has begun taking action to arrest individuals found using these devices.
Cigarette Tax to Increase from April 2025
In addition to the vape ban, the government has decided to increase the corporate income tax on cigarettes from 40% to 45% starting April 1, 2025. This decision was announced by Dr. Kapila Senanayake, Director General of the Department of Fiscal Policy, during the discussion.
The finance committee, chaired by Dr. Harsha de Silva, debated the taxation of cigarettes, with the chairman criticizing the gradual reduction in cigarette taxes over time. He urged the government to justify its approach to increasing excise duties on cigarettes.
Responding to these concerns, Dr. Senanayake explained:
“Various taxes apply to tobacco products, including excise duty, VAT, SSCL, and corporate income tax. The current corporate tax rate of 40% will increase to 45% from April 2025.”
Declining Cigarette Sales and Taxation Gaps
Cigarette sales in Sri Lanka have declined significantly, from 3.1 billion sticks in 2018 to around 2 billion at present. This reduction is attributed to higher prices, increased awareness of smoking-related health risks, and stricter tobacco control policies.
When asked about Sri Lanka’s cigarette taxation rate compared to global benchmarks, Dr. Senanayake noted that the country’s total tobacco tax percentage ranges between 66% and 71%, which is below the World Health Organization’s recommended 75% minimum.
One key challenge in reaching the global taxation benchmark, he pointed out, is that tobacco companies, not the government, ultimately decide the retail price of cigarettes despite tax hikes.
Electronic Cigarettes Declared Illegal
The Excise Department confirmed that using, selling, importing, or distributing electronic cigarettes is entirely illegal in Sri Lanka. Authorities have started arresting individuals found using or possessing vaping devices.
With the growing trend of e-cigarettes globally, Sri Lanka has witnessed an increase in vape users in recent years. However, the government has taken a strict stance against vaping, reinforcing tobacco control measures to curb its usage.
Tougher Tobacco Control Measures on the Way
The upcoming corporate tax increase on cigarettes and the vaping ban mark Sri Lanka’s latest efforts to strengthen tobacco control policies. However, experts suggest that further measures are needed, including a pricing mechanism to prevent tobacco companies from bypassing tax increases.
As the new tax regulations take effect from April 1, 2025, and the vape ban is strictly enforced, Sri Lanka’s tobacco control strategies will continue to evolve in the coming months. The effectiveness of these policies will be closely monitored.