Purpose
EGs are financial instruments that ensure the payment of excise duties on specific goods, such as alcohol, tobacco, and certain energy products. In international trade, an EG helps protect the financial interests of the importing country by ensuring that it can collect the due excise duties in case the importer fails to comply with tax obligations. This guarantee is particularly relevant in scenarios where goods are moved under suspension of excise duty, meaning the duty is deferred until the product reaches its final destination or is consumed.
Sender/receiver
An EG is typically created by the importer or exporter (the party responsible for paying the excise duties) and is directed towards the government agency or customs authority responsible for regulating and collecting excise duties in the country where the goods are being imported or exported. The EG acts as a form of financial assurance that the government will receive the due taxes and duties for the traded goods.
Banks or financial institutions may also be involved in providing or underwriting the EG, especially when the value of the goods and the corresponding duties are significant. This arrangement helps to mitigate the financial risk for both the trading parties and the government authority involved in the transaction.
Legal requirement
The requirement for an excise guarantee is typically mandatory under the laws of most countries, particularly for the import or export of goods subject to excise taxes. The conditions under which an excise guarantee is required vary depending on the jurisdiction and the specific type of product being traded.
Example: Excise goods that are moving within the UK, or between the EU and Northern Ireland, in excise duty suspension must be covered by financial security in the form of a movement guarantee. It is the consignor’s responsibility to make sure that a valid movement guarantee is in place, with detail of the guarantee recorded on the appropriate movement documentation prior to the goods being dispatched in duty suspension.
Standards
The standards for EGs are typically established by national government authorities and agencies responsible for customs and excise regulations within each country.
Data
This document typically includes key data elements such as:
- Guarantor information: Name and contact details of the entity providing the guarantee.
- Importer/exporter information: Name and details of the company or individual responsible for the import/export of goods.
- Description of goods: Detailed information about the goods being imported or exported, including type, quantity, and value.
- Excise duty amount: The specific amount of excise duty that the guarantee covers.
- Validity period: The time frame during which the guarantee is valid.
- Terms and conditions: Specific conditions under which the guarantee is applicable.
- Signatures and endorsements: Signatures of authorised persons and any necessary official endorsements.
Adoption
- Standardisation and harmonisation: Develop and promote a common digital standard or template for EGs that are harmonised across different countries and regions.
- Regulatory support and legislation: Engage with government and regulatory bodies to ensure that digital EGs are legally recognised and enforceable.
- Integration with existing systems: Ensure that the process of issuing and managing EGs is integrated with existing digital trade and customs platforms. This includes compatibility with National Single Window systems and other digital customs management tools.
- Enhanced security measures: Implement robust security protocols to ensure the authenticity and integrity of digital EGs.
- Awareness and training: Conduct awareness campaigns and training programmes for stakeholders, including businesses, customs officials, and financial institutions, to encourage the adoption of digital processes and educate them about the benefits and functionalities of digital EGs.
