The Ministry of Finance is planning to introduce new regulations in the Excise Tax Law (draft law UD139), which could drastically change the market for vaporization devices in Poland. Starting in July 2025, vaporization devices are to be subject to an excise tax of PLN 40 per unit, which will raise their retail price to around PLN 80. As Maciej Powroźnik, president of the Association of Vaping Industry Employers, points out, these changes could result in the elimination of products from the market in favor of traditional cigarettes and large tobacco companies, at the expense of Polish small and medium-sized enterprises.
– In Poland, about 8.5 million people smoke traditional cigarettes, smoking about 50 billion cigarettes a year, or roughly 2.5 billion packs. Looking at hard sales figures, traditional tobacco products make up the majority of the market, while vaping products have only about a 4.5% to 5% share. Yet the state’s attention is focused on this one category, which has been treated rather brutally for more than a year now – Maciej Powroźnik tells the Newseria agency.
– The draft UD139, which is yet another draft of changes to excise laws, is already very controversial in principle, as it introduces a solution that has no equivalent in virtually any civilized market, and certainly not in Europe. This is an attempt to tax vaping devices with a rather drastic rate of about 40 zlotys, the amount of which has not been justified by anything and we do not know what it is based on. In practice, a disposable e-cigarette, which today costs about 30 zlotys, will cost as much as 80 zlotys after the increase, because in Poland VAT is also charged on the excise tax. This will de facto close the market for one nicotine product “
However, this is not the end of the burden. Excise tax rates on e-liquids will also increase dramatically in the coming years. According to the data, the rate will increase by 75% in 2025, 50% in 2026 and 25% in 2027, resulting in a 327% increase compared to 2024. As indicated by The Independent European Vape Alliance (IEVA), the tax rate, at PLN 1.8/ml, will be the highest excise tax on e-liquids among European Union countries.
Threat to SMEs
The new regulations will hit Polish companies in the industry hard. To meet the requirements, companies will have to find additional millions of zlotys in excise taxes, which for many of them means bankruptcy. The Finance Ministry is aware of this – the impact assessment takes into account the fact that many companies in the industry will be forced to close, and companies should re-brand or find other markets for their business.
– Poland’s vaping industry is basically just small and medium-sized, indigenous companies that import and distribute such products. And in the short term, the new regulations will lead to the disappearance of about 1,000 companies employing more than 12,000 people. – predicts the president of the Association of Vaping Industry Employers.
New regulations are being introduced without reliable public consultations, and there is no comprehensive analysis of the economic impact, which the industry believes calls into question the quality and predictability of the legislation.
– The pace of the procedure of the draft on additional excise tax on vaping devices is very fast. We had only seven days to submit our comments on this draft, good practices require a slightly longer period. Also missing was the so-called reconciliation conference, where all those directly concerned would have had the opportunity to discuss with the author of the draft and explain their reasons. We feel extremely uncomfortable with the fact that such solutions – and very drastic ones at that – are taking place without any discussion with interested parties. Maciej Powroźnik says. – Immediately before the elections, commitments were made regarding the stability of the law for entrepreneurs and that tax laws would not go into effect less than six months after their enactment. And now both of these principles have been broken, as the proposed changes are very profound, and are expected to take effect as early as next year.
The ministry argues that the changes are intended to reduce the availability of vaping products, especially among minors. However, experts point out that this could lead to the growth of the gray market, which already accounts for 50% of the e-liquid market in Poland.
What will be the consequences of such decisions?
Legislative uncertainty, drastic price increases and reduced competition in the market may cause consumers to return to traditional cigarettes or use illegally traded products. The Ministry of Finance assumes that budget revenues (including VAT on excise taxes) will reach a projected PLN 414 million. However, such a drastic increase in prices could have the opposite effect, sales will begin to fall, the gray market will grow.
And what about on the subject of public health? By comparison – in Brussels, vaping is recognized as a tool to reduce health risks associated with smoking. Poland, on the other hand, will become the country with the highest taxation of vaping products in the European Union.
In Brussels, the view that vaping is an effective tool for reducing the risk of smoking-related health complications is being heard. In Poland, not only is the topic not being discussed from a public health angle, but the discussion has quite unexpectedly, since the middle of the year, moved to the ministry responsible for taxes -. emphasizes Maciej Powroźnik.
Will the Polish market survive?
Time will tell what effect the changes will have. One thing is certain – the future of the industry is in question, and Polish SMEs need support in the face of such major legislative challenges.
