Chemical tax: an elephant at the Swedish Tax Agency

This morning, officials at the Swedish Tax Agency made a valiant attempt to hold something resembling a briefing on how the much-maligned chemicals tax should be applied. "It must be interpreted in each individual case" and "We understand that you find it complicated" were the most recurring messages.

On July 1 this year, the so-called chemicals tax will be introduced, a reverse duty whereby companies established in Sweden that sell home electronics and white goods will pay an excise tax of up to SEK 320 per product - a tax that suppliers will not have to pay if they are established outside Sweden and deliver from a location outside Sweden's borders. So we are talking about products that are 95% manufactured outside Sweden. The ostensible reason for the tax is to encourage the use of more environmentally friendly flame retardants, but in practice, as the tax is designed, all flame retardants (including the more gentle phosphorescent ones) are taxed in the same way.

Unfortunately, the fact that a large number of companies and industry organizations have declared the tax to be an idiot (as well as authorities such as the Swedish Tax Agency and the Swedish Customs, although more carefully worded of course) has not helped. The whole thing has become a state budget issue, 2.1 billion is going in!

In addition to the fact that the tax is ineffective from an environmental point of view and drives electronics and white goods sellers away from the Swedish market - with thousands of lost jobs as a result - there are a number of ambiguities about how it should be applied. Hence today's information meeting at the Swedish Tax Agency.

One of the key issues is who should be defined as a "warehouse keeper". Exemptions from the tax are made for operators who are "foreign" and who supply goods from an area outside the territory of Sweden. Where the line is drawn is unclear. For example: is a Swedish company that establishes a wholly owned subsidiary in Norway and sells by mail order (i.e. not through its own channels) to customers in Sweden covered by the law?

This and a number of other borderline cases and ambiguities were raised by the business and industry representatives attending the meeting, which were met by stuttering and vague answers from the Tax Agency officials. "We will have to assess that in each individual case" was said at least ten times. A response that - as pointed out by the participants - is extremely unsatisfactory for actors who rightfully demand uniform and clear rules. Knowing what the rules are from the outset is important, not least to ensure that everyone can compete on equal terms.

The elephant in the room, whose ears, tail and tusks were sometimes glimpsed, was how both unreasonable and complicated the tax is. "We are only supposed to apply the law", "You'll have to take that up with the politicians" sounded repeatedly from the officials, when it became sweaty to keep up the civil servant facade.

However, officials pointed to two other excise taxes that have actually been phased out: the incineration tax and the fertilizer tax. Something to take note of right away?

For IT&Telekomföretagen members who were not able to attend, but who want to know more about how the tax is applied, we are organizing a separate information meeting on 13/3. Lawyer Bobby Arash has done his best to interpret the law on behalf of IT&Telekomföretagen and others. You are welcome to sign up.

For more general information on the chemical tax and its consequences, see www.kemikalieskatten.se.