Excise duties are indirect taxes on the consumption or the use of certain products. In contrast to Value Added Tax (VAT) they are mainly specific taxes, i.e. expressed as a monetary amount per quantity of the product. In the EU, unlike VAT, all the revenue from excise duties accrues entirely to the government of the state in which it is levied. In 2008-9, excise duties accounted for about 10% of all revenues collected by HMRC.
The most common excise duties are those on alcoholic beverages, manufactured tobacco products and energy products (e.g. hydrocarbon oils such as motor and heating fuels, electricity, natural gas, coal and coke). All 27 EU Member States apply excise duties to these three product categories. The UK in addition presently levies the following excise duties:
- Air Passenger Duty
- Amusement Machine Licence Duty
- Bingo Duty
- Gaming Duty
- General Betting Duty
- Lottery Duty
- Pool Betting Duty
- Remote Gaming Duty
- The EU legislation in the area of excise duties relates only to excise taxes on alcoholic beverages, manufactured tobacco products and energy products, and was mainly adopted in the context of the establishment of the Internal Market on 1 January 1993, which involved the abolition of controls of a fiscal nature at internal borders between Member States. This legislation, which has been further developed since, can be divided into three main categories:
- Defining the structure of the tax to be applied to a particular group of products. The EU rules mandates the product categories, the way in which the excise duty is calculated (e.g. per hl; per degree alcohol; per 1000 pieces, etc.), the scope of possible exemptions, etc.
- Setting the minimum rates of duty that Member States may levy for each type of product - above those minimum rates, Member States can freely fix their own rate levels.
- General provisions that apply across the product categories - in particular with regard to the production, storage and movement between Member States of excise products.
The UK has its own extensive legislation relating to excisable goods, including the other excise taxes mentioned above. The detailed rules are usually set forth in Statutory Instruments under the appropriate Act of Parliament.
In recent years, in part as a response to increasingly sophisticated tax evasion activities by organised fraudsters, HMRC has increasingly targeted excise as an area for investigation and enforcement action.
4 Eyes Ltd can assist its clients in reviewing and obtaining appropriate authorisations; defining and implementing appropriate procedures and controls, and other excise-related issues.