Proposal for changes of the chemical tax to replace hazardous substances in electronics.

The Swedish Tax Agency and the Swedish Chemicals Agency have submitted the second part of the evaluation of the tax on hazardous substances in electronics to the government. The authorities propose that the tax should be based on the hazardous properties of substances so that articles containing hazardous substances are levied a higher tax rate than articles with less hazardous substances.

- The purpose of the tax is to reduce the presence of hazardous substances used as flame retardants in electronics found in people's homes. But as the tax is designed today, we see that it can sometimes be the case that certain hazardous substances are replaced by other hazardous substances, says Erik Gravenfors, Strategic Advisor at the Swedish Chemicals Agency.

The report, which has now been submitted to the Government, presents proposals for changes in the structure of the tax and changes that will simplify the administration for taxpayers and for authorities. One of the proposed changes is that a new deduction structure is introduced. It is based on an assessment of how hazardous the flame retardants contained in the taxable articles are. The assessment is made according to the criteria for classification and labeling of chemical products in the CLP Regulation. Today, the tax is primarily based on the flame retardants' content of chlorine, bromine, or phosphorus. The flame retardants are also assessed based on whether they are additively or reactively added.

Reactively added flame retardants can react chemically and become an integral part of the material in the electronics. They thus leak less to the environment than flame retardants that are added additively, and do not react and bind chemically.

The authorities also propose that the current wording for "compounds" in the law should be replaced by "flame retardants", which means that substances not used as flame retardants in electronics will not be covered by the tax. The authorities assess that this can make the tax more accurate and clear. The current wording for "compounds" means that all materials that contain substances with chlorine, bromine or phosphorus are covered by the tax, regardless of whether there is a flame retardant function or not.

The Swedish Chemicals Agency also proposes that the highest deduction level be raised from 90 to 95 percent, which may provide additional incentives to replace hazardous substances with less hazardous substances.

Proposed combined measures

• The Chemicals Tax Act’s reference to chemical compounds is replaced by a definition in the law of the term flame retardant.
• The Chemicals Tax Act’s definition of which flame retardants are to be considered reactive and additive respectively is changed.
• The highest possible deduction rate is raised from 90 percent to 95 percent*.
• A new deduction structure is introduced which is based on the flame retardants' assessed hazard in the taxable products. The agents are also assessed based on whether they are additive or reactive. The division in tax deduction rates of 50 percent and 95 percent, respectively, is applied by linking the current deduction provisions to substances specified in two new annexes to the law. These annexes replace the current annex. The assessment of which flame retardants are to be included in each appendix is decided based on:
  1) harmonized classification in accordance with CLP or occurrence on the Candidate List in the REACH Regulation;
  2) other data for hazard assessment, such as self-classification in accordance with CLP or so-called GreenScreen assessments used by parts of the electronics industry;
  3) the presence of bromine, chlorine, fluorine and / or phosphorus in the flame retardant.

*With reference to its authority assignment, the Swedish Tax Agency makes no assessment in this part of the report.

More information is provided on the Swedish Tax Agency's website (in Swedish) External link.

Background

Since 1 July 2017, a special chemical tax has been levied on certain electronic articles manufactured in Sweden or imported from another country. The purpose of the tax is to reduce the presence of hazardous chemical substances, especially flame retardants, in households, and to promote the use of more environmentally and health-friendly alternatives.

On 28 November 2019, the Government commissioned the Swedish Tax Agency and the Swedish Chemicals Agency to evaluate the effect of the tax on chemicals in certain electronics (the Chemicals Tax Act). The assignment also included submitting proposals for changes in the structure of the tax, if necessary. The authorities submitted a report presenting the first part of the assignment to the Government on 1 October 2020.

Facts about the tax on chemicals in certain electronics

The tax on chemicals in certain electronics implies that certain electronics found in private homes are taxable with the possibility of deductions. It is the CN codes in the customs tariff that decide which electronics that are covered by the tax. The deduction right is dependent upon that the person who is to pay the tax can show that the hazardous substances listed in the annex of the Chemicals Tax Act are not found in the article.

The tax rate for white goods is SEK 11 per kilogram and for other electronics SEK 164 per kilogram. Tax must not be paid at an amount higher than SEK 451 per item. According to the Chemicals Tax Act, deductions could be made with either 50 percent of the tax or with 90 percent.

For more information, please contact:
Erik Gravenfors, Strategic Advisor, 08-519 41 157
The Swedish Chemicals Agency’s press contact, 08-519 41 200, press@kemi.se (for journalists)
The Swedish Chemicals Agency Helpdesk, Ask the Swedish Chemicals Agency
The Swedish Tax Agency’s press contact, 010–5748960