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Excise duty March 4th 2011

Learn about the excise duty regulations in Iceland for alcohol and tobacco, including traveller allowances, duty-free shops, taxable entities, exemptions, and tax rates.

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Excise duty March 4th 2011

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  1. Excise duty March 4th 2011

  2. 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

  3. 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.

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

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

  6. 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.

  7. 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

  8. Alcohol

  9. 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.

  10. 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)

  11. 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.

  12. 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)

  13. Sold alcohol litres

  14. State alcohol revenues

  15. Alcohol revenues as % of GDP

  16. 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

  17. 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.

  18. Exemptions • Ships crew members • Less than 15 days: 0.75 liters of spirits and 1,5 liters of wine, or 0.75 litersof 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.

  19. Gap analysis • Difference in definitions on alcohol • The tax base is different • Crew member exemptions?

  20. Tobacco

  21. 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.

  22. 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%

  23. Sold tobacco

  24. Sold tobacco

  25. State tobacco revenues

  26. Excise duty on tobacco as % of GDP

  27. 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

  28. Import procedure ÁTVR orders cigarettes or other tobacco from wholesaler Wholesaler orders from producer abroad Cigarettes imported to the country Wholesaler sends import documents to customs and pays 25,5% VAT to customs Employer of ÁTVR goes to the warehouse and brings the tobacco to ÁTVR warehouse ÁTVR sells the tobacco to retailers of tobacco ÁTVR pays on the 5th. of next month the tobacco excise duty to Directorate of Customs

  29. 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

  30. Gap analysis • Difference in traveller allowance • Difference in definitions on tobacco • Crew member exemptions?

  31. Vehicles and fuel

  32. 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.

  33. 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

  34. 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

  35. 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.

  36. Excise duty on oil

  37. 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.

  38. 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.

  39. 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 busesshall 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

  40. Liquid fossil fuels, electricity and hot water

  41. 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.

  42. 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.

  43. Electricity and hot water - General - • Fixed tax is on electricity and hot water: • The amount of tax on electricity is 0.12 ISK. per kilowatt hour (kWh) of electricity sold. • Tax amount of hot water should be 2% of the retail price of hot water.

  44. 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: • Electricity or hot water delivered to other taxable entities. • Electricity or hot water delivered or used only for producing electricity or hot water for resale

  45. Gap analysis • Several differences between induvidual tax bases. This needs to be scrutinised. • Broader exemptions in the EU regulations

  46. THANK YOU

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