Describing Plastic Packaging Taxes

Objectives

After completing this lesson, you will be able to:

  • Describe the plastic packaging taxes

Plastic Packaging Taxes

In this lesson you will learn what plastic packaging taxes are.

Plastic packaging taxes are a policy instrument to prevent plastic waste.

Hint
It is a quite new policy tool but in many countries it is under discussion to introduce it.

The tax affects companies that produce plastic packaging in, or import plastic packaging to, the country that introduced the tax.

One hotspot for countries introducing plastic packaging taxes is Europe. The reason: The European Union introduced a European Plastic Packaging Levy in 2021, which makes the member states pay 0,80 € for each kilo of plastic packaging waste that is not recycled in that country. How the single member states finance this additional cost is left up to them. One way is to pass the costs further to the industry by introducing own plastic packaging taxes for importing plastics to the country, or for producing it. And with national plastic packaging taxes, the government are, of course not only passing on the costs, but also the incentive to use less single-use plastic packaging and to use recycled content for the indispensable ones. This also helps to fulfill certain goals and regulations as, for example, the Single Use Plastics Directive (EU 2019/904).

The plastic packaging tax legislation develops quickly, and the precise rules differ from country to country. So, here is some examples for questions that might be answered differently in every country:

  • What packaging types and levels are in scope?
  • What is the taxable event? (imports, production, distribution, market entry, etc.)
  • What are the reporting obligations?
  • What forms need to be filled and in what frequency?
  • What are the obligations to provide evidence?
  • What are the rules for recycled plastic content in packaging?
  • Are there exemptions on certain kinds of packaging, e.g. used for human medicine, on tertiary packaging, packaging as an integral part of a product etc.
Note
The calculation rules differ from country to country. This is what SAP Responsible Design and Production solves for the companies as the calculation logics are delivered as content as a service

Links to External Sites

https://www.ey.com/en_lu/tax/why-tax-and-finance-functions-must-pay-heed-to-plastic-taxesPlastic_packaging taxes - A European perspective - KPMG Global

European Plastic Packaging Levy

The Interesting Question for the Industry

QuestionSolution
How will member states finance the extra costs?One way is to hand it over to industry in the form of national plastic taxes.
Caution
The plastic packaging tax is part of the EU recovery package necessitated by EU spending as a result of Covid 19 (NextGeneration EU). So, the revenue from the plastic packaging tax flows into the EU budget. It is not earmarked meaning that the money is not specifically intended to be invested for Circular Economy purposes as e.g. in recycling infrastructure.

Plastic Packaging Tax: United Kingdom

Fact Sheet for Plastic Packaging Tax: Spain

Fact Sheet for Plastic Packaging Tax: Spain

SubjectKey Facts
Taxable subjects​

  • Manufacturers of plastic packaging in Spain – first sale​

  • EU Acquirers of plastic packaging and packaged products​

  • Importers of plastic packaging and packaged products - custom duties​

  • Canary Islands, Ceuta or Melilla are included​

Payment

  • 0.45 € per kg of non-recycled content of plastic packaging​

  • The tax payments are due each month or quarter​

  • Tax may be reclaimed if sourced plastic packaging is exported within 4 years​

  • Representative for non-established taxpayers​

  • Custom declaration for imports​

  • Information on Invoice & tax in the VAT taxable base​

Relevant plastic packaging

  • Virgin plastic of non-reusable packaging​

  • Packaging designed to hold, protect, manipulate, distribute, or present goods, whether they are supplied empty or not​

  • Not only end-consumer packaging in scope, but all packaging​

  • Semi-finished plastic products (preforms, thermoplastic sheets) intended for production of non-reusable plastic packaging​

Plastic packaging exempted from taxation – but subject to reporting​

  • Packaging inadequate for use / destroyed or shipped off Spain immediately​

  • Packaging destined to, or used for medicines, sanitary products, hospital food products, hospital lactation products​

  • Plastic used in finished inks, lacquers, and adhesives to be added to packaging​

  • Plastic rolls used to pack bails of fodder, or cereal for agricultural, or livestock use​

  • Plastic used in products not meant to be shipped together with packaging, or not used to obtain single-use plastic packaging​

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