Parliament votes to cut cigarette duty by half, less than two years after sharp hike

The Parliament has passed legislation submitted by the government to cut the import duty on cigarettes by half, less than two years after the country doubled taxes on tobacco products.

Back in 2024, President Dr. Mohamed Muizzu’s administration increased the import duty on cigarettes and beedi from MVR 3 to MVR 8 per stick, and the ad valorem tax from 50 percent to 100 percent.

But on June 22, the government submitted an amendment to the Import-Export Act, proposing reducing the import duty on cigarettes, beedi and heated tobacco products from MVR 8 to MVR 4, and the ad valorem tax from 100 percent to 30 percent.

The bill, sponsored by Komandoo MP Mohamed Ibrahim, also proposes exempting import duty on products used to help quit smoking, such as nicotine gum and nicotine patches.

The bill passed the Parliament floor vote with bipartisan support on Wednesday morning, with a unanimous vote of 68.

The passage of the bill comes two days it was passed intact by the Whole House Committee.

During the committee stage, lawmakers from the main opposition Maldivian Democratic Party (MDP) had proposed summoning officials from relevant state bodies and analyzing the impact the change would have on the state budget, before passing the bill. However, party failed to formally present the motion in writing, and the bill was called to vote without any amendments.

The 2024 decision to double the import duty on cigarettes had been part of sweeping changes by President Muizzu’s administration to crack down on smoking, which also saw the introduction of a ban on vapes and e-cigarettes, and a smoking ban on the post-2007 generation.

The anti-smoking measures earned Maldives global recognition, with a World No-Tobacco Day Special Recognition Award from the World Health Organization (WHO) for President Muizzu, and an Integrity Award from the Global Center for Good Governance in Tobacco Control (GGTC) for the Maldives.

Despite the global recognition for the measures, the ban on vapes and the subsequent doubling of import duty on cigarettes created an illegal market where vapes and cheaper brands of cigarettes are being smuggled in and sold in the Maldives. This has also resulted in the loss of millions of Rufiyaa in import revenue.

President Muizzu’s administration had continued to defend the tax hike, stating that public health far outweighed any financial loss.

But during a press briefing on May 31, Homeland Security Minister Ali Ihusan said the 2024 decision to double taxes on cigarettes had been a “difficult” one, and that the administration was considering lowering the import duty to MVR 4 per stick – something which he said was recommended by the World Health Organization (WHO).

The WHO has not made any official comment regarding the claim.

When questioned about the decision during a press briefing on June 1, President Muizzu insisted he wasn’t taking a U-turn on his strict stance on tobacco products, but was making “necessary changes”