ZIMSEC O Level Commerce Notes: Excise Duty
Why excise duty is paid?
- Excise duty is taxed on certain specified home produced goods for example tobacco meant for consumption in the home market in order to:
- Raise revenue for the government.
- Discourage consumption of dangerous products.
- Reduce domestic demand.
- Release more goods for export.
Methods of calculating duty.
- Ad valorem duty:
- This is calculated based on the value of imported goods.
- For example 75% on luxury goods.
- Specific duty
- This calculation is based on quantities or volume of imported goods e.g. 25% per kg of imported material.
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