Tax on chemicals within certain electronic products | KPMG | SE

Tax on chemicals within certain electronic products

Tax on chemicals within certain electronic products

Sweden has introduced a new tax on chemicals within certain electronic products that will take effect from 1 July 2017.

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Sweden has introduced a new tax on chemicals within certain electronic products that are sold in or brought into Sweden. The tax will take effect from 1 July 2017, and will impact various white goods and electronic products including (amongst others): ovens, fridges, washing machines, vacuum cleaners, telephones, routers, games consoles and computers.
 

For in-scope white goods chemical tax will apply at a rate of 8 kr/kg, and for electronic goods at 120 kr/kg, with a maximum tax of 320kr per product. There is a possibility to reduce the tax due by either 50% or 90% depending on the amount of certain chemicals included within the product.


Chemical tax is to be paid and reported by any business that manufactures taxable products or brings taxable products into the country, or by a registered warehouse holder that delivers taxable products to buyer that is not a warehouse holder.


A business can register as a chemical tax warehouse holder with the Swedish Tax Authority under prescribed conditions. The advantage warehousing provides is chemical tax only becomes due at the point at which the taxable products are delivered to a buyer that is not a warehouse holder. This can therefore provide a cash flow advantage in delaying tax payment until the time of sale, and also potentially shift the tax accounting obligations to a party further down the supply chain.


Who will be impacted?

Chemical tax will impact any business that makes, sells and or purchases in-scope white goods and electronic products in Sweden. This could either be directly as a taxpayer required to file and pay Chemical tax, or indirectly due to the increase cost of impacted goods.


KPMG’s Comments

The intention of the tax is to reduce the amount of certain chemicals within the home, and is therefore targeted at household electronic products. However, as the tax is based on product types, rather than their usage, it will impact more broadly than products that are used solely in the home.


As the tax is based on weight and not price it can represent up to 20% of the typical purchase price for certain products. The tax has received heavy criticism for its impact on the Swedish retail sector, not least because it will not apply to goods that are sold directly to Swedish consumers by businesses that are located and deliver from outside of Sweden.


We strongly recommend that businesses impacted either directly or indirectly by the new tax give immediate consideration to the commercial impact of this tax on their supply chains, and establish which party will be responsible for the payment of the tax. This should include an analysis of the impact on pricing (both on the purchase and sales side) in order to ensure that the tax is correctly factored into relevant agreements and forecasts.


From a compliance perspective is it important to establish which products will be in-scope for the tax, at what rate, and availability of any of the potential deductions for low chemical content. Plans should also be made to obtain relevant registrations, and to establish a process for reporting and payment going forward.


KPMG can assist your business in preparing for the introduction of chemical tax in the following ways:

  • Assessment of the impact of the tax on your current supply chains, in order to identify the key commercial and pricing considerations that should be addressed now.

  • Product classification, including maximization of potential deductions.

  • Assistance with relevant registrations, including in respect of warehousing.

  • Advice on the tax accounting points in relation to the given product flows, including potential strategies for optimization.

  • Process support to ensure efficient management of the tax going forward.


For additional information or assistance, please do not hesitate to contact us.


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Swedish version of the article

KPMG's portal for the new Swedish Chemical Tax

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