Wednesday, 12 March 2014

The Difference between Excise Duty and Custom Duty

There are all sorts of taxes that are payable to local governments. These taxes are frequently and often have to be paid by business owners and those providing a service. The purpose of the taxes is to cover the expenses that the government faces such as the development of infrastructures. There are two different types of these direct and indirect. The two types of indirect taxes are known as excise duty and custom duty.

Custom duties are levied on imported goods and have been brought into the country for the purpose of selling. Custom duty may also be known as the consumption duty. Authorities collect these taxes from the goods that have been imported by an importer. The amount of custom duty is determined by the value of the goods. The World Customs Organisation has developed the assessable value, which uses a coded system.

Excise duty needs to be paid for the goods that are manufactured and sold in a particular country. They are indirect taxes as they are passed over to the consumer as the cost is included when working out the cost of the goods. It can be levied alongside VAT or sales tax and is the largest proportion of the taxes added to the price of the goods. It’s calculated on the amount or the volume of a liquid and each country has its individual systems of applying the excise duty.

The Differences
Both of these taxes are levied by the government but there is a distinct difference between the two.  Excise is levied by the government and the goods and products that are manufactured in the country, and customs duty is applied for goods imported from foreign countries. While this is a clear difference a lot of the other aspects are similar, if not the same, such as:
  • Both excise and custom tax procedures of administration, settlement and tribunal.
  • The appeals, confiscations and refund search.
  • The principles of valuation.

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