299. Deputy Roderic O'Gorman asked the Minister for Finance the tax certification regime that is to be put in place for vaping products and if he will address the concern that using a self-certification process rather than a tax stamp will increase opportunities for black market products; and if he will make a statement on the matter. [33716/25]

Paschal Donohoe, Minister for Finance: Chapter 1 of Part 2 of Finance Act 2024 legislates for the introduction of E-liquid Products Tax (EPT). Under the new law, EPT will apply to both nicotine-containing and non-nicotine-containing e-liquid products. Essentially e-liquids are liquids used in e-cigarettes including refill cartridges for refillable devices. Similar to the approach for other national excises, the taxing point will be the first supply of e-liquid product in the State and the tax will follow Revenue’s standard model of self-assessment. Suppliers of e-liquid product will be required to register with Revenue in advance of making a first supply of e-liquid products in the State. These suppliers will be liable to account for and pay the tax. The tax is subject to commencement by Ministerial Order and arrangements are underway to enable the new tax to come into effect later this year. 

Ireland currently operates a tax stamp system in accordance with section 73 of Finance Act 2005 (as amended) in respect of two specified tobacco products: cigarettes and roll-your-own tobacco. Ireland’s tax stamp is part of the control regime for the taxation of these particular products. The taxation of tobacco products generally (including cigarettes and roll-your-own tobacco) is harmonised across the EU, which makes the products subject to the strict control and movement system for excisable products (EMCS). The control regime also applies to mineral oils and alcohol. The EMCS is an EU-wide system, administered by national tax authorities, under which the movement of the product is tightly controlled through authorised tax warehouses with duty suspension arrangements. The charge to tax on a harmonised excisable product (such as tobacco) arises when the product is ‘released for consumption’ from the tax warehouse, and in the case of the specified tobacco products, this is the point at which the tax stamps are applied. 

As a non-harmonised national excise, the operation of EPT has to be compatible with the EU Single Market rules which preclude the use of cross-border movement controls. These rules mean that e-liquid products coming into the State from other Member States or Northern Ireland (which is part of the Single Market for goods) cannot be subject to the type of cross-border movement controls that are integral to the regime for the existing EU-harmonised excises, such as tobacco. 

During the design of EPT, serious consideration was given by Revenue and my Department to the appropriate charging point for the tax. Approaches to other Irish excises were considered as were approaches to similar taxes in other countries. It was concluded that charging EPT at the point of first supply of the product in the State is, on balance, the most appropriate approach. In particular, the alternative model of a ‘released for consumption’ approach to charging EPT would require the development and operation of a complex national (non-EMCS) system of tax warehousing and controls; crucially, these could only have very limited effectiveness in a non-harmonized regime - given that they could only operate on a national basis and without recourse to cross-border controls - and the cost of setting up and operating such a system could not be justified given such limitations on its potential effectiveness. 

Ireland’s existing tax stamp is closely integrated to the ‘released for consumption’ tax model used for tobacco. Having regard to the different tax model (‘first supply’) that has been legislated for EPT, it is not clear at this stage that a tax stamp would be a useful tool in securing the collection of the new tax. However, this could be reviewed in the future, in light of the actual experience of operating EPT when it is up and running. 

The Deputy raises some issues related to regulation of the vaping industry, including effective restriction of the sale of illegal products. Policy and legislation regarding e-liquid and e-cigarette products, including regulation of their content, and of their sale and promotion is dealt with by my colleague the Minister for Health and her Department, and enforced principally through the network of Environmental Health Officers operating under the Health Service Executive. This will remain the case following the commencement of EPT.