The Story Behind Korea’s Laws: Your Guide to Korea’s Legal Pulse
SEOUL, Oct. 20 (Korea Bizwire) — A South Korean court has ruled that only some imported nicotine liquids used in e-cigarettes are subject to tobacco-related taxes, drawing a distinction based on whether the nicotine was extracted from tobacco leaves or stems.
The Seoul Administrative Court said on October 19 that it had partially upheld a lawsuit filed by a local e-cigarette importer against the Ministry of Health and Welfare over a 510 million won ($370,000) public health surcharge.
The importer, identified only as Company A, brought in nicotine liquids from Malaysia and China between August 2018 and June 2019. It declared the products tax-exempt, arguing that the nicotine was derived from tobacco stems, not leaves — and therefore did not qualify as “tobacco” under the Tobacco Business Act.
Under current law, tobacco products made from leaves are taxed, while those using other parts of the plant are not.
In 2021, Seoul Customs disagreed, reporting to the ministry that the imports should be classified as tobacco products. The ministry then imposed a public health surcharge totaling 510 million won.
The court, however, ruled that about 212 million won in taxes on the Malaysian imports should be canceled, while upholding 298 million won levied on the Chinese products.
Judge Kang Jae-won, who presided over the case, said evidence showed that the Chinese nicotine concentrate was extracted from tobacco leaves, citing company materials that described extraction from “leaf veins” rather than stems. In contrast, the Malaysian supplier’s documentation lacked proof that leaves were used in production.
“The nicotine in the Chinese imports was clearly derived from tobacco leaves, making it subject to taxation,” the court said. “But the evidence provided does not establish that the Malaysian products were manufactured from tobacco leaves, and thus the tax imposition on those items must be canceled.”
The ruling underscores how minute chemical and botanical distinctions can determine tax liability in Korea’s rapidly expanding e-cigarette market — a sector still navigating the gray areas of regulation between traditional tobacco and new nicotine products.
Jerry M. Kim (jerry_kim@koreabizwire.com)
