Israel’s Ministry of Finance is advancing a new tax structure for e-cigarettes and nicotine pouches, shifting the tax burden from e-liquids to the vaping devices themselves in an effort to curb illicit trade.
- New Device Tax: Introduces a 10-shekel tax per vape device and a 350-shekel per kg tax on tobacco and nicotine pouches.
- Liquid Tax Reduction: Lowers the tax on e-liquids to 1 shekel per milliliter to encourage legal market compliance.
- Fast-Track Approval: The measure requires only the signature of Finance Minister Bezalel Smotrich and approval from the Knesset Finance Committee to take effect.
The Israeli Ministry of Finance is advancing a new tax bill targeting e-cigarettes and nicotine pouches. Driven by a professional committee’s findings, the overhaul aims to dismantle the black market by restructuring how vaping products are taxed, shifting focus from e-liquids to the devices themselves.
Currently, Israel’s tax policy mirrors traditional tobacco, focusing heavily on e-liquids. However, a professional committee concluded that e-cigarettes are distinct products, and the liquid alone does not represent the primary production value or usage method. Furthermore, the previously high liquid taxes inadvertently fueled a thriving black market, pushing vendors into a regulatory “grey zone.”
To address this, the new legislation proposes treating the vape device and the liquid as a combined taxable entity. By lowering the liquid tax and introducing a device tax, the government hopes to incentivize legal trading and improve overall compliance.
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| Product Category | Proposed Tax Rate |
|---|---|
| Vape Devices | 10 shekels per device (New) |
| E-liquids | 1 shekel per milliliter (Reduced) |
| Tobacco/Nicotine Pouches | ~350 shekels per kilogram (New) |
The Israel Tax Authority has published the bill for public comment. Following this period, Finance Minister Bezalel Smotrich can sign the decree, allowing it to bypass a full three-reading legislative process.
The decree will take effect upon approval by the Knesset Finance Committee. Unlike recent controversial changes to personal import VAT exemptions, this vape tax reform is expected to pass without widespread parliamentary resistance.
