Referred to as the “iPhone of e-cigs”, Metallic Blue is priced at 120,000 won ($110), and can be purchased both in stores and online. Last November PMI also released the limited edition iQOS Ruby edition, and the regular iQOS was first launched in Korea the previous May. Subsequently, PMI’s competitor BAT Korea launched its “Glo” device in August and KT&G released its “Lil” device on the market in November.

HnB products levied a lower tax rate than cigarettes

At first, these products had held an advantageous position in the market, as South Korea had categorized such tobacco products differently than their combustible counterparts, and were levied at a lower tax rate than the 75% imposed on regular cigarettes.

The tax on HnB products has been increased from 538 won to 897 won, which is still lower than the 1,007 won levied on regular cigarettes.
Then last October, Korea’s National Assembly’s finance committee discussed the possible implementation of a tax on HnB devices, and a bill implementing this excise tax was passed in November. “HNB cigarettes should be categorized as conventional cigarettes as they use the same tobacco and emit smoke, which is similar to the harmful smoke released by traditional cigarettes,” said Rep. Kim Kwang-lim of the opposition Liberty Korea Party at the time.

Since then, the Korean government has raised the consumption tax on the products from 538 won to 897 won, which is still lower than the 1,007 won levied on regular cigarettes. In response to this, PMI has increased the prices of the Heatsticks that go with the IQOS device by 4.7%.

PMI striving to gain credibility

In Korea, as around the world, many are still skeptical about the relative benefits of switching from regular cigarettes to HnB devices and electronic cigarettes. Last November Philip Morris Korea’s corporate affairs director, Kim Byung-chul, said that the company is fully aware of these credibility issues. “We’re searching ways to overcome this issue. We have released our latest study results. In early next year, we will disclose raw data of the study. It is very rare to release raw data in this industry,” he said at the time.

Read Further: Korea Biomedical Review

Korea passes bill to increase tax on HnB products

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