Darren O'Rourke (Meath East, Sinn Fein)
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46. To ask the Minister for Finance the details of the new proposal of the e-liquid products tax and the way in which he intends to ensure that tax evasion particularly from pop-up vape shops does not occur as a company (details supplied) reported that an illicit market could rise to nearly 60% - €131 million in tax could be lost each year; and the measures he is taking to ensure that these 'fly by night pop-up shops' do not sell nicotine products to teenagers under 18 years of age. [32964/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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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. 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.

The taxation of e-cigarettes and novel products, including e-liquids, is expected to be addressed at EU level through a revision of the Tobacco Tax Directive (2011/64/EU). However, the Commission’s proposals for revision of the Directive have been postponed on a number of occasions in the last few years, and in the meantime, a significant number of Member States have moved to introduce domestic taxes on e-cigarette products. In the interest of public health, I have decided to proceed with the introduction of a national tax. Nonetheless, the introduction of a harmonised tax framework for these products across the EU remains the preferred approach, as it will be the most effective way to address the policy and operational challenges that arise. This is why I, along with fourteen other finance and economy Ministers from other Member States, signed a letter in May of this year calling on the Commission to prioritise the urgent revision of the Tobacco Tax Directive.

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 regimes for the existing EU-harmonised excises, such as that which applies to 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. The tax will follow Revenue’s standard model of self-assessment and 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. Suppliers will be liable to account for and pay the tax. In line with other taxes, Revenue will use a range of risk identification programmes to identify and confront non-compliance with the tax requirements.

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 enforced principally through the network of Environmental Health Officers operating under the HSE.

The Tobacco Products Directive (2014/40/EU), dealt with by the Department of Health, regulates e-cigarettes and nicotine-containing e-liquids placed on the market in the EU. It sets a maximum nicotine concentration level and volume, and other health and safety rules on ingredients and packaging. The Directive was transposed into Irish law by the Minister for Health under the European Union (Manufacture, Presentation and Sale of Tobacco and Related Products) Regulations 2016. In recent years, the Department of Health has also introduced further measures to regulate e-cigarettes and similar products such as prohibiting the sale of these products to those under 18, restrictions on advertising, points of sale and promotion of e-cigarettes as well as introducing a new licensing system for sellers of nicotine inhaling products such as e-cigarettes which is due to commence in February 2026. Further measures regarding the regulation of these products are due to be introduced by the Minister for Health under the Public Health (Nicotine Inhaling Products) Bill 2024.

My colleague, the Minister for Health, will have further information on these regulatory provisions.