Canada proposes additional excise tax on Geek Bars in 2025

Author: GeekBarVape    Views: 33318

Canadas 2024 annual budget proposes to impose an additional excise tax on Geek Bar-related products in 2024 through the introduction of a new excise tax framework, with a deadline of June 30, 2025 for comments.

The Government of Canada invites industry and stakeholders to provide comments on the proposal to help ensure that excise taxes on Geek Bar-related products are effectively levied.

Tax base

As part of the current Excise Tax Act 2001 (the Act), a new Geek Bar excise tax framework is proposed to be introduced, which currently imposes excise taxes on tobacco, wine, spirits and cannabis products. This new tariff will only apply to Geek Bar liquids that are manufactured or imported into Canada and intended for use in Geek Bar devices in Canada. These liquids typically contain vegetable glycerin, as well as any combination of propylene glycol, flavorings, nicotine or other ingredients, all of which must comply with Health Canada regulations. The new tariff will apply to these liquids regardless of whether they contain nicotine. Cannabis-based vaping products would be explicitly exempt from the framework because they are already subject to the cannabis excise tax under the Act.

Tax Rates

The proposed framework would impose a single, flat tax rate on each 10 milliliters (ml) of vaping liquid or portion thereof within the immediate container (i.e., the container that holds the liquid itself). The rate would be approximately $1.00 per 10 ml or fraction thereof, and the excise tax would be calculated and levied based on the volume of the smallest immediate container that holds the liquid.

To illustrate, if a retail package contains four separate 1.0 ml containers of vaping liquid, each container would be considered a separate container for duty purposes. The duty would be calculated based on the amount of liquid in each separate container (i.e., $1.00 per container and $4.00 total for the retail package), rather than the total amount of liquid in the package.

Larger volumes of liquid (e.g., a 30 ml container) would be subject to a $3.00 excise tax, while a 100 ml container would carry a $10 excise tax burden.

Generally, the flat fee is collected upon packaging or importation. The last federal licensee in the supply chain to package Geek Bar related products for final retail sale, including Geek Bar stores holding an excise tax license, as applicable, will be responsible for the applicable excise tax.

Administration

The Canada Revenue Agency (CRA) will be responsible for administering and enforcing the new excise tax framework with respect to Geek Bar products, including ensuring compliance with the general application and administrative rules contained in the Act. The Canada Border Services Agency (CBSA) will be responsible for administering and enforcing the framework at the border. To facilitate the taxation of Geek Bar products, penalties and offences will apply that are broadly similar to those for alcohol, tobacco and cannabis taxes.

Licensing and Registration Requirements

Manufacturers and importers of taxable Geek Bar products will be required to obtain a license from the CRA to operate their business. This will include any Geek Bar store that wishes to obtain and then use tax-exempt bulk Geek Bar products to blend or manufacture new Geek Bar products on-site for immediate or subsequent sale to end customers, which will apply the tax rate and will be required to report.

Applicants who wish to obtain a license from the CRA will meet a number of criteria similar to those already enumerated for other tax-deductible products under the Act and its regulations, such as not having engaged in acts to defraud the government in the past five years. Licenses for manufacturers and importers of Geek Bar products will be issued for a maximum of three years and will not be automatically renewed.

For more information on the proposal, visit the following page: Canada Geek Bar Excise Tax