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
EUR (239 ISK)
Excise duty: 1,5
Wine
1ltr
Cl.: 14,75
EUR (1.153 ISK)
Excise duty: 7,22
Strong
1ltr
Cl.: 44,00
28,03 EUR (4.477 ISK)
Excise duty:
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