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Sweden proposes Chemical Tax on Clothing and Footwear products

The Swedish government is considering implementing a tax on clothing and footwear products containing SVHCs under EU REACH Regulations.

In order to increase public finances and reduce the incidence or risk of exposure to, and spread of, substances in clothing and footwear that are harmful to the environment and human health, the Swedish government is proposing an act to tax certain chemicals in clothing and footwear products. 

The proposal requires a default taxation of SEK 40 (EUR 3.7) per kilogram of the product’s weight for all clothing and footwear that are produced or imported into Sweden from abroad, with the possibility of deductions of up to 95% if the product does not contain specific harmful chemicals. Also, there could be an additional tax of SEK 19 per kilogram if the product contains rubber material, polyvinyl chloride or polyurethane, and another additional tax of SEK 19 per kilogram for all-weather products.

The tax proposal is focused on chemicals that fulfil the criteria for Substances of Very High Concern (SVHCs) under the EU REACH Regulations. This involves substances that are carcinogenic, mutagenic or toxic for reproduction (CMR), substances with sensitising properties, substances with characteristics of persistent, bioaccumulative and toxic (PBT), substances that are very persistent and very bioaccumulative (vPvB), and endocrine disrupting substances. In addition, the proposal also considers that there are strong grounds to phase out antimicrobial substances (biocides), as the use of biocides may accelerate the incidence and spread of antibiotic resistance.

The proposal recommends enforcing the tax from 1st April 2021, with tax liability arising after June 2021.

Under the proposal, the tax would basically apply to all clothing and footwear products, but with the exemptions on personal protective equipment (PPE) and toys, as their related chemical restrictions are covered by separate EU chemical regulations. For the same reason, chemicals that are found in electric or electronic components of clothing and footwear would not be taxed, as well as those chemicals contained in non-textile components, such as metal or plastic fasteners and non-textile decorative attachments.

According to the proposal, manufacturers or importers of products subject to the tax from another EU country into Sweden are liable to pay the tax. In some situations, distance sale intermediary companies could be liable for the tax if the total value of intermediate sales of taxable products to Sweden is more than SEK 100,000 during the present or previous tax year.

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Sweden proposes Chemical Tax on Clothing and Footwear products
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