Excise taxes apply to specific goods and services, and manufacturers or retailers often include these taxes in the product price. Governments use excise duties to generate revenue and to discourage the consumption of goods that negatively affect public health or the environment.

The new Excise Taxes feature automates the calculation of excise duties by applying specific rules and rates for different products and regions.

Scope of the initial release

The initial release doesn't include compliance or statutory reports. Instead, it introduces a flexible excise tax calculation framework. The framework supports different calculation models and can be adapted to meet various regulatory requirements through configuration.

Setup

Before calculating excise taxes, you must configure excise tax types. For each excise tax type, you can define a tax basis as Weight, Volume, Quantity, Sugar Content, Alcohol Volume (ABV), or Active Content.

You also need to configure excise entry types, and specify which item ledger entry types contribute to the excise‑liable quantity. The following options are available: Purchase, Sale, Positive Adjustment, Negative Adjustment, Output, or Assembly Output.

As the last step, set up excise duty rates for each excise tax type to calculate the final tax amount based on the selected basis and the accumulated excise‑liable quantity. You also need to configure the items and fixed assets you want to include in excise tax calculations.