EXCISE BOND

In an Excise Bond the Surety guarantees to the obligee (Government of Canada) that the principal will remit special excise taxes that becomes due and payable. The bond penalty is usually subject to a present maximum amount depending on the expected volume of business.

Companies that acquire products on which excise taxes are charged (tobacco, alcohol, gasoline) must generally pay those taxes prior to using or shipping such products. The excise tax bond provides such companies (principal) with the opportunity to immediately use or ship certain goods prior to the final determination and payment of the requirement excise taxes.

Examples of excise bonds are:

• Excise Tax Act Bonds
• Excise Bond for Tobacco Manufacturer