On October 20, 2023, Morocco's Council of Government took a significant step by adopting Finance Bill No. 60-26 for the year 2027, with the text presented to parliament just three days later. A notable aspect of this legislation is Article 5, which amends the 1977 dahir that governs domestic consumption taxes (TIC). Starting January 1, 2027, e-cigarettes will be subjected to a tax of 100 dirhams per unit, more than doubling the previous levy that was only applicable to disposable e-cigarettes under the 2025 Finance Law, which had set the tax at 50 dirhams.
The newly proposed tax encompasses a broader definition of e-cigarettes, as it now includes any device used to inhale vapor, regardless of whether it contains nicotine. This includes not just the devices themselves, but also all components such as cartridges and tanks. The bill recognizes that e-cigarettes can be disposable, refillable, or rechargeable with single-use cartridges, and can be sold empty or prefilled. Furthermore, Article 3 of the bill adds e-cigarettes to the list of goods for which the customs administration is responsible for collecting domestic consumption taxes.
While the tax on e-liquids remains unchanged, it is crucial to note that Morocco has already implemented taxes on vaping liquids, with refill rates ranging from 5 to 10 dirhams per 10 ml bottle. The government justifies the increase in taxation through an explanatory note that emphasizes two main points: the need to counteract new products designed to avoid current taxes and the alignment of this measure with World Health Organization recommendations concerning the health risks associated with vaping, particularly among the youth.
The application of the 100-dirham unit rate to separately sold components remains somewhat ambiguous. However, the definition of e-cigarettes includes “any component,” which leaves the possibility that items like cartridges could be taxed as separate units. This clarification is expected to be addressed in the customs circular that accompanies the finance law. It is also anticipated that the overall impact on retail prices will exceed the new tax amount since the 20% VAT is applied to a price that already incorporates the TIC.
Moreover, since 2023, Morocco has implemented new tax measures on vaping products each year. The 2023 Finance Law raised the import duty on e-cigarettes from 2.5% to 40%, and subsequent laws continued to increase taxation on disposables and other products. However, this new 2027 bill marks a notable turn of events. Previously, Fouzi Lekjaa, the then Minister Delegate for the Budget, had rejected calls from opposition parties to further increase taxes on vaping products during budget discussions, arguing that existing taxes were already substantial and that raising them could exacerbate smuggling issues.
In terms of cigarettes, Article 5 of the bill also introduces a new excise tax schedule extending through 2031, continuing the reforms initiated by the 2022 Finance Law. This revised tax structure includes a specific component per 1,000 cigarettes, an ad valorem component based on the retail price excluding VAT, and a minimum levy, which is projected to increase each year until 2031.
In conclusion, while the approved measures still require parliamentary approval, if passed, the new 100-dirham e-cigarette tax along with the revised cigarette tax schedule will come into effect on January 1, 2027. This legislative move underscores the Moroccan government's commitment to regulating tobacco and vaping products in line with public health objectives.
As reported by vapingpost.com.
