Excise tax

Published Wednesday 30 September 2026

Table of contents

• What is excise tax?
• How excise duty works in Singapore
• Goods that attract excise duty in Singapore
• Types of excise duty rates
• How to calculate excise duty
• Who pays excise tax?
• Excise duty vs GST
• Why excise tax matters to small business
• Manage excise costs and GST with Xero
• FAQs on excise tax
• Related terms
• Learn more about excise tax

Key takeaways

• Excise tax is a charge on specific goods that governments want to discourage, and businesses usually pass the cost on in their prices
• In Singapore, excise duty applies to four categories of goods made in or imported into the country: liquor, tobacco, motor vehicles and petroleum products
• Duty is a percentage of customs value or a fixed amount per unit, and import goods and services tax (GST) at 9% is charged on the value plus duty
• Build duty into your pricing and cash flow plans so you’re ready to pay when goods clear customs or leave a licensed warehouse

What is excise tax?

Excise tax is a tax on specific goods, charged to discourage people from consuming them. The business that makes or imports the goods pays it, then usually passes the cost to customers through higher prices.

Think of it as a cost baked into the shelf price of a bottle of beer. The shopper pays it as part of the price, and the importer or brewer hands it to the government.

How excise duty works in Singapore

In Singapore, excise tax is called excise duty, and it sits alongside customs duty. Singapore Customs defines excise duty as a charge on goods manufactured in or imported into Singapore, while customs duty applies to imported goods only.

So a local brewery pays excise duty on the beer it makes here. An importer bringing in stout can pay both duties, as the worked example below shows.

Goods that attract excise duty in Singapore

Singapore limits duty to four categories of goods. The Singapore Customs list of dutiable goods covers:

• intoxicating liquors
• tobacco products
• motor vehicles
• petroleum products and biodiesel blends

Governments use excise to discourage consumption of goods like these. In the Budget 2026 statement, the government raised tobacco excise duty by 20% across all tobacco products from 12 February 2026 to discourage tobacco use.

Types of excise duty rates

Singapore charges duty as either a percentage of value or a fixed amount per unit. An ad valorem rate is a percentage of customs value, and a specific rate is a fixed amount per unit of weight or quantity.

Singapore Customs uses these example rates to show how each type works:

• S$16 customs duty and S$60 excise duty per litre of alcohol for stout
• S$0.589 per gramme per stick for cigarettes
• 20% of customs value for motor vehicles
• S$7.90 per decalitre (dal) for research octane number (RON) 97 and higher petrol

Treat these as examples, since rates can change. Check Singapore Customs for your product’s current rate before you set prices.

How to calculate excise duty

You can work out duty in four steps once you know your product’s rate. These steps follow the method in Singapore Customs’ worked examples.

1. Find the customs and excise duty rates for your product on the Singapore Customs list.
2. Work out the quantity the rate applies to; for alcohol, multiply the volume by the alcohol strength.
3. Multiply that quantity, or the customs value for ad valorem goods, by each rate and add the results.
4. For imports, add 9% GST on the cost, insurance and freight (CIF) value plus the duty.

Say you import 75 litres of stout with 5% alcohol strength. Your duty is 75 × (S$16 customs + S$60 excise) × 5% = S$285.

Import GST comes next. The Inland Revenue Authority of Singapore (IRAS) guide on importing goods sets GST at 9% of the CIF value plus any duty. So your GST is 9% × (CIF value + S$285).

Who pays excise tax?

The importer pays duty on imported goods, and the manufacturer pays on goods made locally. Customers then pay it indirectly through the retail price.

Two Singapore Customs schemes let you hold off paying until goods go out for local use. Under the licensed warehouse scheme, approved companies store imported dutiable goods with duty and GST suspended, then pay when the goods leave for local consumption.

Local manufacturers can use the excise factory scheme, which licenses premises for making and storing dutiable goods. Duty and GST stay suspended while goods remain there, so a small brewer pays when a batch leaves the premises for local sale.

Excise duty vs GST

Excise duty targets four categories of goods, while GST at 9% applies broadly. The bigger difference for your books is what you can recover.

If you’re GST-registered, you can usually claim back GST on purchases as input tax. Duty stays with you as a cost, so it’s generally treated as part of the cost of goods.

The order matters too: duty comes first, and GST is then charged on the duty-inclusive value. For a refresher on how the tax works, read this plain-English GST explainer.

Why excise tax matters to small business

Excise duty affects your margins and your cash flow, so plan for it before you order stock. Since duty is generally part of your cost of goods, it belongs in your price modelling.

Include duty and freight in your landed cost when you set your prices. That way, your gross profit reflects what each item really costs you.

Duty is also due before you’ve sold anything, when goods clear customs or leave a licensed warehouse. Forecasting your cash flow helps you set aside funds for those payments. A local accountant or bookkeeper can confirm how duty affects your tax position.

Manage excise costs and GST with Xero

Planning for excise duty is easier when your costs and tax sit in one place. With Xero, you can record duty in your cost of goods and track GST on purchases and sales. You can also forecast cash flow and run reports that show your margins.

Automated bank feeds keep your figures up to date, so you can price with confidence and pay duty on time. Try Xero today and get one month free.

FAQs on excise tax

These answers cover common questions about excise tax in Singapore.

Is excise tax the same as GST?

They’re separate taxes: Singapore Customs charges excise duty on a short list of goods, while IRAS administers GST. On imported dutiable goods, you pay both.

Is excise duty part of the cost of goods?

Generally, yes: duty on stock for resale usually counts as part of that stock’s cost. IRAS allows deductions for expenses incurred wholly and exclusively to produce income, so confirm the treatment for your business with your accountant.

Is there a tax on sugary drinks in Singapore?

Singapore hasn’t introduced a tax on sugar-sweetened beverages. Instead, it uses Nutri-Grade labelling and advertising rules from the Health Promotion Board (HPB).

Is gambling subject to excise duty in Singapore?

Gambling has its own regime. Lawful betting and lotteries are taxed under the Gambling Duties Act 2022, separate from customs and excise duty.

Does the SAF levy count as excise tax?

The sustainable aviation fuel (SAF) levy is a charge on flights departing Singapore, separate from excise duty. The Civil Aviation Authority of Singapore (CAAS) applies it to passenger tickets and general and business aviation services sold from 1 October 2026 for flights departing from 1 January 2027, and to air cargo services sold from 1 October 2027 for flights departing from 1 January 2028.

Related terms

• Liabilities
• Accounts payable
• Cash flow
• Gross profit
• Invoice

Learn more about excise tax

• GST guide for business
• How to calculate GST and issue tax invoices
• Cost of goods sold explained
• Cash flow forecast template