The Minister of Customs has welcomed legislation being passed which will prevent millions of dollars in potential tax evasion on water-pipe tobacco products.

The Customs and Excise (Tobacco Products) Amendment Act 2022 changes the way excise and excise-equivalent duty is calculated on these tobacco products. Water-pipe tobacco is also known as flavoured, hookah, shisha, molasses and fruit tobacco.

“This change will prevent tax evasion. It will also create a level playing field where honest importers aren’t able to be undercut on price by dishonest importers who evade tax by making false declarations,” Meka Whaitiri said.

“Duty on water-pipe tobacco products will now be based on the weight of product, rather than the previous system where excise was calculated on the tobacco content declared by importers, which Customs was unable to verify. The new excise and excise-equivalent duty rate for water-pipe tobacco is $234.77 per kilogram.

“Customs suspects that some importers of these products, which are used in hookah or shisha smoking devices, have been under-declaring the tobacco content of their products and, therefore, evading much of the duty they should be paying,” Meka Whaitiri said.

“The legislative change will also make water-pipe tobacco a prohibited import which will require a permit to be imported. This will give Customs greater controls over these types of products and reduce revenue evasion,” Minister Whaitiri said.

The new duty rate based on weight, and permit requirements on water-pipe tobacco will come into effect on the 24th of May 2022.

“While water-pipe tobacco is a niche product in New Zealand the legislative changes support the Government’s aim for Aotearoa New Zealand to be smokefree by 2025,” Minister Whaitiri added.

A further set of technical changes will ensure the ongoing ability to adjust excise rates for inflation annually across all classifications of tobacco products.

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