Government Refutes Allegations of 20 Trillion Won Tax Evasion on Chinese E-Cigarette Imports... "44 Cases of Tax Evasion Detected Since 2022"

Regarding suspicions of large-scale tax evasion during the import process of Chinese-made electronic cigarettes, the government explained on the 24th that it has strengthened customs inspections on synthetic nicotine imports and has been detecting tax evasion attempts.

Previously, Assemblyman Jeong Jinwook of the Democratic Party of Korea claimed that Chinese liquid e-cigarettes, reported as synthetic nicotine products and thus not taxed, might actually contain tobacco-derived nicotine, alleging that tax evasion could amount to between 16 trillion and 20 trillion won.

Assemblyman Jeong raised suspicions that, under the Chinese legal system, it is impossible to manufacture or export synthetic nicotine liquid e-cigarettes, implying that companies may have falsified documents to import these products in order to evade taxes.

Photo by Yonhap News Agency of an electronic cigarette store in downtown Seoul on the 24th

In response, the Ministry of Economy and Finance stated that, since 2019, it has strengthened customs inspections for synthetic nicotine imports by requiring six types of documents and mandating detailed reporting on whether the nicotine is natural or synthetic and its content. The ministry explained, "In this process, in November 2022, the Korea Customs Service developed its own analysis method to distinguish between natural and synthetic nicotine, and has since detected cases of tax evasion, including avoidance of individual consumption taxes." The ministry introduced data showing that cases of falsely declaring natural nicotine as synthetic were detected as follows: 10 cases (290 liters) in 2022, 27 cases (163 liters) in 2023, and 5 cases (1.62 liters) in 2024, as well as 2 cases (0.02 liters) last year.

An official from the Ministry of Economy and Finance stated, "Although the production of synthetic nicotine solutions in China is strictly regulated, exports are not completely prohibited, and there are no special regulations related to exports to Korea," clarifying that, under the Chinese system, exporting synthetic nicotine is not entirely impossible.

Regarding the controversy over tobacco tax not being imposed on synthetic nicotine e-cigarettes imported before the revised Tobacco Business Act came into effect, the ministry explained, "During the National Assembly discussions, due to concerns over retroactive legislation, it was decided to apply the law only to products manufactured or imported after the effective date."

The ministry added, "Nevertheless, to prevent the long-term circulation of stock products manufactured or imported before the effective date, the government has established the 'Safety Management Standards for Liquid-type E-cigarette Stock Products' based on the Framework Act on Consumers, and these standards have been in effect since April 28."

The Ministry of Economy and Finance stated, "The government plans to respond strictly to attempts to circumvent regulations, such as the sale of nicotine base liquids and products marketed as nicotine-free but actually containing nicotine."

Regarding nicotine analogs intended for human inhalation, the Ministry of Food and Drug Safety will soon conduct a toxicity assessment, and based on the results, the government will seek countermeasures at the national level.

This content was produced with the assistance of AI translation services.