When it comes to the taxation of vaping products in Canada, the excise tax structure differs from other taxes as it is based on the volume of e-liquid or vape juice rather than a percentage of the cost. While this system exempts vape hardware that does not contain e-liquid from the tax, it subjects pre-filled pods, disposable vapes, and e-liquids (with or without nicotine) to duties under the federal excise vape tax.
This taxation policy raises several critical questions about the rationale behind this approach, its impact on consumers and the industry, and its effectiveness in regulating vaping products. Therefore, it is essential to conduct further critical analysis and evaluation of the excise tax structure to assess its appropriateness and effectiveness in achieving its objectives.
In order to calculate the amount of excise tax a vaping product will be subject to, all you need to know is the volume of e-liquid present within the product. In regards to e-liquids, the tax will be calculated based on the volume of the entire product, but for prefilled pods and disposables, it is based on the volume of e-liquid in each individually constructed unit, so each pod and each disposable is subject to its own individually calculated tax regardless of how many come in a package together.
The vaping products excise tax in Canada follows a formulaic approach, which levies a $1 tax for every 2 mL of e-liquid in the first 10 mL, with an additional $1 for every extra 10 mL of e-liquid. For instance, a 10 mL e-liquid bottle would incur $5 in excise tax, while a 30 mL bottle would only have $2 in additional tax, resulting in a total of $7 in excise tax. The tax calculation chart below provides further examples of how the formula is applied.
|
Type of Vape |
Size in mL |
Excise Tax Calculation |
|
E-liquid |
10 mL |
$1 for every 2 mL = $5 |
|
E-liquid |
30 mL |
$5 for first 10 mL + $1 for second 10 mL + $1 for third 10 mL = $7 total excise tax |
|
E-liquid |
60 mL |
$5 for first 10 mL + $1 for additional 10 mL x 5 = $10 total excise tax |
|
Pre-Filled pods |
≤ 2 mL |
$1 minimum per pod |
|
Disposables |
6 mL |
$1 for every 2 mL = $3 |
|
Disposables |
13 mL |
$5 for first 10 mL + $1 for second 10 mL = $6 total excise tax |
This chart represents common sizes of e-liquid capacity in disposable vapes, pre-filled pods, and bulk e-liquid containers. Other sizes and respective total tax calculations exist outside of the figures represented in this chart.
Valor Distributions: Your Source for Wholesale Vaping Products
To avoid the complexities of the federal excise tax system, businesses can opt to source their vaping products from a reliable Canadian wholesaler such as Valor Distributions. This approach offers several advantages, including access to a team of experts who are knowledgeable about the latest regulations and guidelines and are responsible for handling all the necessary paperwork. Furthermore, businesses can benefit from industry-leading customer service, top-quality products, and fast delivery times, as Valor Distributions ships our products directly from our Ontario facility.