The new federal excise duty on vaping products is set to go into effect in 2022 on all e-liquids regardless of the level of nicotine they contain. However, it would only apply to e-liquids that are either manufactured in Canada or imported to be used locally.
The tax would be calculated and imposed based on the volume of the smallest immediate container holding the liquid, stated the document, and Cannabis-based vape products would be exempt since they are already subject to excise duties on cannabis.
“The last federal licensee in the supply chain who packaged the vaping product for final retail sale, including vape shops holding an excise licence, as applicable, would be liable to pay the applicable excise duty,” reads the proposal, explaining which entity is responsible for paying the tax.
Taxes imposed in individual provinces
The measure comes after several provinces across Canada have in the past year set their own taxes in a bid to discourage teen vaping. In April, Saskatchewan announced the vapour products tax (VPT) on the retail price of all vapour liquids, products and devices, effective September 1st. As of then, only retailers with a VDT licence will be allowed to sell these products across the province.
Similarly, as of the 1st of January, a 13% tax hike on vaping products has gone into effect British Columbia, increasing the tax from 7 to 20%. The tax increase is applicable to all vaping products and electronic cigarettes, as well as their refills, whether they contain nicotine or cannabis products. At the time, the Ministry of Finance says that British Columbia was the first Canadian province to introduce such a tax.
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