Global Daily Tax News, Canada Expanding Federally Enforced Tax On Vaping Products, (Jun 21, 2024)

The Canadian Government has released draft regulations on the implementation of the country's new tax framework on vaping products.

In Budget 2021, the government announced both the introduction of a new taxation framework for the imposition of excise duties on vaping products in 2022, and its intention to work with any provinces and territories interested in a federally coordinated approach to taxing these products. Under the framework, total revenues are to be split between federal and provincial and territorial governments on a 50/50 basis.

The new regulations enable Alberta, Manitoba, New Brunswick, Yukon, and Prince Edward Island to become participating jurisdictions within the Coordinated Vaping Products Taxation Agreement, alongside existing participants Ontario, Quebec, the Northwest Territories, and Nunavut, with effect from January 1, 2025, the Government said.

In Budget 2024, the government announced a 12-percent increase to vaping excise duty rates. This increase is the equivalent of 12 cents per typical vape pod in a non-participating jurisdiction, or 24 cents per typical vape pod in a participating jurisdiction. The increase will take effect on July 1, 2024, along with the implementation of the coordinated taxation regime in Ontario, Quebec, the Northwest Territories, and Nunavut.

As of July 1, 2024, any vaping product manufactured in, or imported into, Canada and destined for the duty-paid market of a participating jurisdiction (Ontario, Quebec, the Northwest Territories, and Nunavut) must bear an excise stamp specific to that province or territory.

Beginning January 1, 2025, jurisdiction-specific stamps will be required for dutiable vaping products intended for sale in Alberta, Manitoba, New Brunswick, Yukon, and Prince Edward Island.

The Canada Revenue Agency is responsible for the collection and administration of vaping product excise duties in Canada, while the Canada Border Services Agency collects excise duties and other applicable taxes and duties on vaping products imported into Canada.