By Timothy S. Donahue

Top Takeaways:

• South Korea’s National Assembly advanced a bill to classify synthetic nicotine as tobacco, paving the way for taxation and tighter regulation.
• Lawmakers estimate the measure could generate 930 billion won ($646 million) in new annual tax revenue.
• If enacted, it would mark the first revision to the Tobacco Business Act’s definition of tobacco in 37 years.

South Korea’s National Assembly took a significant step toward reforming its tobacco laws by approving an amendment to classify synthetic nicotine as tobacco under the Tobacco Business Act. If approved by the full Assembly, this move would mean that liquid e-cigarettes containing synthetic nicotine would face the same taxes and regulations as traditional tobacco products for the first time.

The subcommittee on economic and fiscal policy of the Assembly’s Strategy and Finance Committee approved the bill on Monday, broadening the legal definition of tobacco from “tobacco leaf” to “tobacco or nicotine.” Lawmakers said this change could generate an estimated 930 billion won ($646 million) in additional tax revenue annually.

“This is the first time since the Tobacco Business Act was enacted in 1988 that the legal definition of tobacco would be revised,” said Rep. Song Eon-seog of the ruling People Power Party, noting that tax losses over the past four years from synthetic nicotine amounted to roughly 3.39 trillion won.

Synthetic nicotine, widely used in liquid e-cigarettes because of its lower cost, has so far been classified as an industrial product, exempt from the tobacco consumption tax, the National Health Promotion Levy, and sales restrictions applied to heat-not-burn products, according to media reports. This has allowed vape products to stay cheaper and more accessible than their natural-nicotine counterparts, a discrepancy lawmakers said raised fairness concerns.

Momentum to regulate synthetic nicotine grew after a government-commissioned study in November 2024 found it contained about twice as many harmful substances as natural nicotine. International comparisons also played a key role: 35 of the 38 OECD member states already regulate synthetic nicotine as tobacco, with only South Korea, Japan, and Colombia treating it differently.

The revised bill includes a two-year grace period before enforcing retailer distance requirements, a compromise aimed at minimizing the impact on small business owners. Liquid e-cigarettes containing natural nicotine are currently taxed at 1,800 won per milliliter, a standard expected to apply to synthetic nicotine products once the law is enacted.

The amendment now proceeds to the full Strategy and Finance Committee, then moves to the Legislation and Judiciary Committee, before going to a main Assembly vote. If approved, industry officials expect prices for synthetic nicotine e-liquids to increase significantly, likely reshaping South Korea’s e-cigarette market.

Earlier this month, the National Assembly failed to pass legislation that would classify synthetic nicotine as tobacco under the law, leaving this rapidly expanding category untaxed and mostly unregulated.