Ciggy tax at duty-free islands, zones

KUALA LUMPUR: Come Jan 1, cigarettes will be subjected to taxes at all duty-free islands or duty-free zones.

The move, one of the measures under the recently passed Budget 2021, is an effort to stem cigarette smuggling activities said to be rampant at duty-free islands and zones.

Deputy Finance Minister Datuk Abdul Rahim Bakri said cigarettes are one of the most smuggled items in the country.

“From what we know, cigarette smuggling occurs on some duty-free islands throughout the country.

“They are brought in illegally and the government is unable to collect revenue on them, ” he said.

Abdul Rahim said enforcement to curb smuggling activities would be stepped up.

He noted that amendments to several existing laws such as the Free Zone Act and Excise Act were made to give more powers to customs enforcement officers to seize contraband items.

This includes allowing Customs department offices to be used as detention centres for suspects before charges are brought.

Meanwhile, Subang MP Wong Chen proposed that the cigarette tax be increased by 70% in line with the World Health Organisation’s recommendation to help curb smoking.

He raised the matter during debates on amendments to the Excise Act, noting that cigarette companies would usually lobby MPs to push for the government to clamp down harder on cigarette smuggling.

“Apart from the proposed 70% increase in tax, there must also be more effective enforcement to prevent cigarette smuggling, ” he added.

He noted that a decrease in cigarette smuggling would help cigarette companies earn a reasonable profit while higher taxes would curb smoking.

A recent study revealed that Malaysia accounted for more than half of the global sales of illegal cigarettes in 2019.

An estimated 12 billion illicit cigarettes were sold here last year, comprising 62% of worldwide sales of illegal cigarettes last year.

Malaysia lost an estimated RM5bil in taxes due to sales of illegal cigarettes.