Tobacco imports jumped in 2025

2026-02-20 - 07:54

According to import data, Bhutan saw Nu 815 million (mn) worth of tobacco in various forms and e-cigarettes being imported in 2025 with a break up of 766.56 for tobacco and Nu 48.447 mn for e-cigarettes. In 2024 tobacco products worth Nu 745 mn were imported and e-cigarettes worth around Nu 16.8 mn. While the tobacco products saw a jump of Nu 21.56 mn, the big jump is in the e-cigarettes category with a jump of 31.647 mn. A source said that the jump in tobacco imports and especially e-cigarettes in 2025 was due to the heightened export after people knew that major excise duties are going to be placed on tobacco products. To get an idea, in 2024 a total of 288,939 e-cigarettes were imported but this jumped sharply to 448,086 e-cigarettes in 2025. In 2023 Bhutan imported Nu 542.33 mn worth of tobacco products and Nu 2.7 mn worth of e-cigarettes. The increase in tobacco import over the years is being driven by two main factors. The first seems to be growing usage and spread, especially among the young, driven by the popularity of e-cigarettes. The other factor at play is that many businesses and importers have found it to be a very profitable business, despite the past taxes. Before 2026 tobacco had a sales tax of 100% (for imports from India) and customs duty of 10% (an additional tax for third country imports). Despite the high taxes an official said there was a high profit margin going up to even 50%. Profit was further enhanced as some importers also engaged in non-declaration which means bringing in around 500 boxes but only declaring around 400 for tax purposes knowing that customs at the border normally cannot go through and count every packet. Another way to enhance profit was under declare the price though there was less latitude for this. An official said in the beginning it was only a few importers bringing in tobacco but as other businesses saw the profits being made a lot of them joined in numbers to start importing. A worrying trend is also an explosion in the usage of e-cigarettes which jumped from 994 pieces in 2022 to 448,086 in 2025. The main users here are the youth as it has become a fashionable trend among them. The National Council is looking at bringing in certain amendment in the Tobacco Control Act to address this rising concern. While the hope is that the higher excise taxes will lead to a major drop in tobacco consumption and e-cigarettes an official said the large import in 2025 would take care of supply for the first few months of 2026. It is hoped that the higher excise duties on tobacco will bring down its consumption. Excise tax is levied at a fixed rate of Nu. 2000 per kilogram (KGM) of pan masala. It applies to both import and domestic production. This means a Nu 80 Rajanigandha packet of 17 grams should increase in price from Nu 80 to Nu 110. In the case of tobacco, the excise tax on cigarettes and biris will be Nu 10 per stick. For example, one packet of Gold Flake Cigarettes which contains 20 sticks should see its price go up from Nu 300 to Nu 420. The excise tax on cigars is Nu 40 per cigar. The excise tax on Khani is Nu 1500 per kilogram. The proposed selling price will increase from Nu.20 to Nu.33 for one packet of Khani (Chewing Tobacco) of 10 grams. The excise tax on e-cigarettes device and refill tobacco is 100% ad valorem, or excise tax calculated as percentage on the product’s value. Apart from the excise taxes above an additional fee to discourage tobacco is the permit fees which is Nu 1 per cigarette, Nu 1000 per e-cigarette, Nu 500 per kg of e-cigarette liquid , pan masala and Khani and Nu 4 per cigar stick. An official said that earlier certain importers to avoid the tax burden and increase their profit would under declare the price as the tax was on the price but now with a Nu 10 per cigarette the Nu 200 tax per packet cannot be avoided. Apart from tobacco coming in legally there were also cases in the past where it was being smuggled in, hidden in construction material, vegetables etc. In 2025, prior to June, a total of Nu. 2.413 mn was collected as fines and penalties for cases of non-declaration. Following the implementation of anti-hoarding measures after June, a total 21 confiscations were effected in cases involving goods without the requisite permits. The sale of tobacco was first banned in 2004 with a National Assembly resolution but the enforcement was weak. Then in 2010 a very tough Tobacco Control Act came in with strict penalties and imprisonment for smuggling in even small quantities. In 2012 due to outrage over growing number of young Bhutanese being imprisoned the Act was amended with lighter penalties and punishment. There were further amendments in 2014. However, the pandemic changed things around as it was felt that tobacco smuggling could bring in COVID and so in July 2021 Parliament amended the Act to allow the import and sale of tobacco products in a major way.