By Timothy S. Donahue

Top Takeaways:

• Appeal will decide: Malaysia’s government said future decisions on vape taxes will depend on the outcome of an appeal over the legality of removing liquid nicotine from the Poisons List.
• High Court ruling challenged: The government has appealed a May High Court decision that found the nicotine exemption order was irrational.
• Tax policy in limbo: The case leaves uncertainty over the long-term legal foundation for Malaysia’s excise regime on nicotine vape products.

Malaysia’s government will wait for the Court of Appeal to rule before making any decisions on taxes and duties for nicotine vape products, Finance Minister Datuk Seri Anwar Ibrahim told Parliament on Wednesday, further extending uncertainty over one of Southeast Asia’s most closely watched vaping cases.

In a written parliamentary reply, Anwar said the government would decide its next steps only after the appeal process concludes.

“Given that the Health Ministry, through the Attorney General’s Chambers, has filed an appeal against the Kuala Lumpur High Court’s judgment, any government decision arising from the matter will be made in accordance with the Court of Appeal’s eventual decision,” he said.

The response came after Datuk Dr. Ahmad Yunus Hairi asked about the tax implications of nicotine-containing vape products following the Kuala Lumpur High Court’s ruling on the government’s decision to remove liquid nicotine from Malaysia’s Poisons List.

The legal dispute stems from the government’s March 2023 decision to exempt liquid nicotine and nicotine gels for electronic cigarettes from the Poisons Act 1952. The exemption allowed the government to impose excise duties on nicotine vaping products as part of the 2023 federal budget and to pave the way for a regulated domestic vape market.

On May 15, the Kuala Lumpur High Court ruled that the exemption order was “irrational” and granted judicial review to three non-governmental organizations that challenged the decision.

Justice Aliza Sulaiman found that the primary reason for removing liquid nicotine from the Poisons List was to facilitate the collection of excise duties proposed in the 2023 Budget. The court noted that legalizing nicotine liquids and gels enabled the government to tax those products and direct the resulting revenue to health initiatives administered by the Health Ministry.

The government, however, has appealed that decision through the Attorney General’s Chambers, so the High Court ruling has not concluded the legal process.

The appeal has implications beyond taxation.

Malaysia’s removal of liquid nicotine from the Poisons List was a key regulatory step preceding the enactment of the Control of Smoking Products for Public Health Act 2024, which established the country’s first comprehensive legal framework governing cigarettes, vaping products, and other smoking products.

The law introduced licensing requirements, product registration, packaging standards, advertising restrictions, and age-of-sale provisions for nicotine products.