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Ch-16---Excise-duty

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					Excise duty
March 4th 2011
                 Excise duty
• Act nr. 97/1987 on excise duty - general provisions:
• Special acts on excise duty:

   •   Alcohol and tobacco – Act nr. 96/1995
   •   Vehicles and fuel – Act nr. 29/1993
   •   Oil and kilometre – Act nr. 87/2004
   •   Liquid fossil fuels, electricity and hot water – Act
       nr. 129/2009
                The scope

• The excise duty applies to all products, new and
used, imported to the country or produced, processed,
or packed in the country and classified in the annex in
the Act. Exported goods are not taxable.
                     Travellers

• Act no. 96/1995 on excise duty on alcohol and
  tobacco
• Traveller allowance
   • Alcohol
       a. 1 litre of strong alcohol and 1 litre of wine or,
       b. 3 litre of wine, or
       c. 1 litre of strong alcohol or 1,5 litre of wine and 6 litre of
          beer.
   • Tobacco
       a. 200 cigarettes or 250 gr. of other tobacco.
                    Travellers

•   Customs Act no. 88/2005
•   Traveller allowance on other products
        a. Up to 408 EU (65.000 ISK) based on the retail price at the
           place of purchase
        b. The value of individual purchase however may not exceed
           204 EU (32.500 ISK)
                 Duty free

• 4 Duty free shops

• Arrival and departure shop in the airports

• Alcohol is subject to 10% and tobacco to 40% excise
  duty in arrival shop. No duty in the departure
  stores.
                  Excise duty
                  - Summary -
• Gap analysis:


   • There is a difference between Icalnad and EU
     concerning traveller allowance.
   • The duty free shop at the arrivals is different
     from EU system
Alcohol
                   Alcohol
• Act no. 96/1995 on excise duty on alcohol and
tobacco

•Alcohol is defined as any liquid that contains more
than 2.25% of alcohol by volume.

• The State Alcohol and Tobacco Company of Iceland
(ÁTVR) is a monopoly in sales of alcohol in Iceland.
                     Tax base
• The excise duty is to be calculated proportionally on
  the fraction of cl. of alcohol and fraction of liters of
  the alcoholic beverage.
• Excise duty on alcohol is as follows on each cl. of
  alcohol in each litre.
   •   Of ale containing more than 2.25% alcohol, and of goods which
       contain blended ale and non-alcohol beverages: 0,54 EUR (86,90
       ISK)
   •   Of wine and fermented beverages: 0,49 EUR (78,15 ISK)
   •   Other alcohol: 0,64 EUR (101,74 ISK)
              Taxable entities
• Taxable under this Act are those who import or
  produce alcohol in this country for sale or
  processing.
• Taxable are also those who bring with them to the
  country liquor for personal use, such as those who
  receive alcohol from abroad without a sale or
  processing. It is Authorized to restrict imports under
  to certain types of products, maximum quantity or
  maximum value and to set conditions for who may
  enter under her.
          Example of prices

Beer     1ltr   Cl.: 2,75      Excise duty: 1,5
  EUR (239 ISK)

Wine      1ltr    Cl.: 14,75   Excise duty: 7,22
  EUR (1.153 ISK)

Strong     1ltr   Cl.: 44,00   Excise duty:
   28,03 EUR (4.477 ISK)
                       Sold alcohol litres
                                 Alcohol litres sold

25.000


20.000


15.000


10.000


 5.000


    0
         2000   2001   2002   2003   2004   2005   2006   2007   2008   2009   2010
                State alcohol revenues
                                         Revenues

60.000 EUR

50.000 EUR

40.000 EUR

30.000 EUR

20.000 EUR

10.000 EUR

    0 EUR
             2000   2001   2002   2003    2004   2005   2006   2007   2008   2009   2010
              Alcohol revenues as % of
                        GDP
                            Excise duties on alcohol as % GDP

1,00
0,90
0,80
0,70
0,60
0,50
0,40
0,30
0,20
0,10
0,00
       1998   1999   2000    2001   2002   2003   2004   2005   2006   2007   2008   2009
                 Time of payment
• Excise duty on alcohol is to be paid in custom
• Of alcohol produces that is marketed in Iceland, the
  duty is to be paid on sale or at the delivery of the
  product from factory/producer to the buyer

        RSK


              Excise duty
                                   Excise duty
   Alcohol product
    from producer                    Buyer
                     Exemptions
• Excise duty is to be waived or refunded in the
following occations:

   •   On sale out of Iceland
   •   On import or sale to diplomats
   •   Of alcohol witch is registered in pharmacopoeia, to doctors or
       pharmacies for sale for medical purpose
   •   On import and sale of alcohol duty-free shops and duty-free stocks.
       Furthermore, of alcohol where the duty has been paid, but is later sent
       abroad, to a duty free shop, a customs warehouse, the duty free depot
       storage or free zone or destroyed under customs supervision.
                Exemptions

Ships crew members
  Less than 15 days: 0.75 liters of spirits and 1,5 liters of
  wine, or 0.75 liters of spirits or wine and 12 liters of beer.

   More than 15 days: 1.5 liters of spirits and 3 liters of wine,
   or 1.5 liters of spirits or wine and 24 liters of beer.

Air crew members
   Less than 15 days: 0.375 liters of spirits and 0.75 liters of
   wine, or 0.375 liters of spirits or 0.75 liters of wine and 3
   liters of beer.
   More than 15 days: 1 liter of spirits and 0.75 liters of wine,
   or 1 liter of spirits or 0.75 liters of wine and 6 liters of beer.
           Gap analysis


• Difference in definitions on alcohol
• The tax base is different
• Crew member exemptions?
Tobacco
                 Tobacco
• Act no 96/1996 on Excise duty on Alcohol and
Tobacco

•Tobacco is defined as any goods classified in tariff
headings listed in chapter 24 of Annex I to Act. no.
55/1987 on customs. Defined as cigarettes, cigars and
other tobacco.

•ÁTVR collects excise taxes on tobacco which are
imported to the country or produced in the country.

•ÁTVR labels every product in accordance with
tobacco defense act.
            Tax amount

• Special tobacco tax

   • 2,72 EUR (437.00 ISK) on each pack of 20
   cigarettes

   • 0,14 EUR (21.85 ISK) pr. gr. on cigars and other
   tobacco

• VAT 25,5%
                           Sold tobacco
                                     Sold tobacco

2.000.000
1.800.000
1.600.000
1.400.000
1.200.000
                                                                     Cigarettes (carton)
1.000.000
                                                                     Cigars (packs of 10)
 800.000
 600.000
 400.000
 200.000
       0
            2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
                          Sold tobacco
                                    Sold tobacco

30.000

25.000

20.000

                                                                  Smoking tobacco (kg)
15.000
                                                                  Other tobacco (kg)

10.000

 5.000

    0
         2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
               State tobacco revenues
                               Revenues

5.000
4.500
4.000
3.500
3.000
2.500
2.000
1.500
1.000
 500
   0
        2001   2002   2003   2004   2005   2006   2007   2008   2009
       Excise duty on tobacco as % of
                    GDP
                     Excise duty on tobacco as % of GDP

0,45
0,40
0,35
0,30
0,25
0,20
0,15
0,10
0,05
0,00
       2001   2002    2003    2004    2005    2006    2007   2008   2009
                      Exemptions
• Travellers – 200 cigarettes or 250 gr. other tobacco

   Ships crew members
   • Less than 15 days: 200 cigarettes or 250 gr. tobacco
   • More than 15 days: 400 cigarettes or 500 gr. tobacco

   Air crew members
   • Less than 15 days: 100 cigarettes or 125 gr. tobacco
   • More than 15 days: 200 cigarettes or 250 gr. tobacco

   • Diplomatic employees
             Import procedure
1. ÁTVR orders cigarettes or other tobacco from
   wholesaler
2. Wholesaler orders from producer abroad
3. Cigarettes imported to the country
4. Wholesaler sends import documents to customs
   and pays 25,5% VAT to customs
5. Employer of ÁTVR goes to the warehouse and
   brings the tobacco to ÁTVR warehouse
6. ÁTVR sells the tobacco to retailers of tobacco
7. ÁTVR pays on the 5th. of next month the tobacco
   excise duty to Directorate of Customs
                   Snus/ Snuff
• ÁTVR manufactures a small amount of snuff for
inland market (approx. 25.000 kg. a year)

• Imports raw tobacco through wholesalers

• Manufactures it and packs in its own
warehouse

• Sells it to retailers
           Gap analysis


• Difference in traveller allowance
• Difference in definitions on tobacco
• Crew member exemptions?
Vehicles and fuel
                 Vehicles and fuel
• Act nr. 29/1993 on excise duty on vehicles ,
petroleum etc.

•A excise duty shall be paid to the State Treasury on
vehicles which are subject to registration in
accordance with the Traffic Law, No. 50/1987, et al.
and petroleum listed in the tariff heading list I.
                   Tax amount
• Vehicles
   • Excise duty shall be levied based on their
   registered emissions of carbon dioxide ( CO2),
   measured in grams per kilometer driven

• Petroleum
    • General tax 0,15 EUR (23,86 ISK) pr. litre
    •Special petroleum tax : Unleaded fuel 0,24 EUR
    (38,55 ISK) pr. litre and on other fuel 0,25 EUR (40,55
    ISK)
    • The revenue from the special petroleum tax
    earmarked for road construction
                         Tax base

•Of imported product the tax base is their custom duty as
decided ac. to chapter V in the customs act plus the duty as
they are decided in the customs act

•Of locally produced products the tax base is the retail price
from producer without excise duty to independent person

•The duty is collected in custom on imported products

•Of locally produced products the collected in either sale or
delivery from producer or retailer
                      Exemptions

•Petrol that will be used or demonstrably been used in
aircraft shall be exempt from excise duty.

•If the petrol is blended with additives that are not of mineral
origin that part is exempt from excise duty.

•Foreign embassies and diplomatic agents shall be
reimbursed the ad volerum duty and the special excise tax on
fuel for vehicles owned by them.
Excise duty on oil
                   Excise duty on oil

•Act nr. 87/2004 on excise duty on oil and kilometre duty

•Excise duty is to be paid of gas and diesel oil that is usable as
fuel for vehicles.

•Charging includes oil which has been blended taxable oil,
provided the mixtures suitable for use as fuel for vehicles.

•The amount of oil charge is 0,34 EUR (54.88 ISK) per liter of
oil.
                Exemptions and refunds
• Oils which are not of mineral origin should be exempt
  from excise duty
• Taxable entities may sell or supply oil under without oil
  charge collection in the following cases:
   •   For use on ships
   •   For home heating and heating public swimming pools
   •   For use in industry and on construction vehicles
   •   For use on tractors
   •   For electricity production
   •   For use on vehicles intended for specific use and burn diesel fuel mostly standstill
   •   For use the belt cars and vehicles were used exclusively off-road or in enclosed
       workspaces
   •   For use on cars owned by rescue teams.
            Exemptions and refunds
• Conditions of sale or delivery of oil without payment
  under oil charge is that the oil has been added colors and
  logo materials
• Only those who have received permission from the
  Internal Revenue Authority is authorized to add color
  and/or label products in gas and diesel fuel under the Act
• Those who are patent to run scheduled buses shall be
  returned 85% of the oil charge of oil for the operation of
  scheduled buses.
• Oil charge is to be refunded on oil that is used on cars
  owned by foreign embassies
Liquid fossil fuels, electricity and
            hot water
            Liquid fossil fuels
                       - General -


•Act on environmental and resource taxes nr.
129/2009

• Carbon tax on fossil fuels. Liquid fossil fuels means a
gas-and diesel fuel, gasoline, aircraft and jet fuel and
fuel oil.
             Liquid fossil fuels
                          - General -


•Fixed carbon tax:

   • 0,03 EUR (4.35 ISK) per liter of gas and diesel fuel
   • 0,02 EUR (3.80 ISK) per liter of gasoline,
   • 0,03 EUR (4.10 ISK) per liter of aircraft and jet fuel, and
   • 0,04 EUR (5.35 ISK) per kilogram of fuel oil.
           Electricity and hot water
                                - General -


• Fixed tax is on electricity and hot water:

   1. The amount of tax on electricity is 0.12 ISK. per kilowatt hour (kWh)
      of electricity sold.

   2. Tax amount of hot water should be 2% of the retail price of hot
      water.
                    Exemptions

• Exempt from taxation are those who sell electricity or
  hot water for less than 3.111 EUR (500.000 ISK) per
  year.

• Taxable sale or supply does not include:

   1. Electricity or hot water delivered to other taxable
      entities.
   2. Electricity or hot water delivered or used only for
      producing electricity or hot water for resale
                Gap analysis

• Several differences between induvidual tax bases.
This needs to be scrutinised.
•Broader exemptions in the EU regulations
THANK YOU

				
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