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We offer our service relating to the environmental product tax to companies trading in, manufacturing or using packing.
The legislative context of the environmental product tax has changed considerably since 2012. From 2013 both the duty of auditing and the product tax itself have been transferred under the Tax Authority’s control, and certain related legislations have been amended further. The act and the government decree on environmental product tax were not the only ones affected by the above changes, the act on waste management directly related to the issue of the environmental product tax and the decrees pertinent to waste management were also amended. With the declining authority of the organizations coordinating waste recycling, business associations are also required to pay special attention to their waste management obligations.
The inspectors of the tax authority regularly and strictly audit whether business entities comply with every small detail of the rules relating to the declaration, payment and potentially to the recovery of the product tax. The rate of the product tax penalty is double of the usual rate defined in the Act on Tax Procedure. Therefore, the inaccurate or non-compliant preparation of documents related to product tax calculations or recovery, as well as the incorrect or non-compliant documentation of the sub-ledgers, or in the case of assumption, the conditions of assumption of the product tax carry a higher tax risk. Companies may avoid significant penalties by merely a small amount of administration and some circumspection.
We offer our service relating to the environmental product tax to companies trading in, manufacturing or using as packing any of the following products:
We have to note that almost all companies engaged in the sale of products may be subject to obligations relating to the product tax on packaging materials, if they purchase goods from abroad or assume the related obligations, and it is important to note that the environmental product tax liability of service providers cannot be excluded automatically either. For instance, they may also purchase their fliers and brochures abroad, or may procure their tangible fixed assets or electronic appliances from international markets.
A number of companies also have to keep a record of the use of the above listed products for their own purposes because legal regulations also prescribe product tax payment obligation in this case.
The inspectors of the Hungarian Tax and Customs Authority (NAV) scrutinize whether businesses comply with every tiny bit of rule regarding the declaration, payment and the potential reclaim of the environmental product charge. From January 2013, NAV will identify defaulting taxpayers much more easily.
In the table below we summarized the risks companies face in relation to the declaration and the payment of the product charge. In this example, we calculated with a product charge liability of HUF 100 000 as, in our experience, a medium-sized enterprise (using or releasing for domestic circulation 5-6 tons of products, packaging materials subject to product charge) will most likely incur product charge liability of at least this amount quarterly. The penalty rates shown in the table are based on our audit experience.
|Burdens in HUF (assuming a minimal product charge liability of HUF 100 000)|
|Product charge obligations||Enterprise fulfilling tax obligations duly||Enterprise not declaring and not paying product charge|
|Payment of product charge*||100 000||-|
|Failure of registration||-||50 000|
|Failure of return filing||-||50 000|
|Failure of record keeping||-||50 000|
|Product charge shortage *||-||100 000|
|Product charge penalty (100 percent)||-||100 000|
|Late payment interest (calculating with a delay of 1 year)*||-||15 000|
|Waste management penalty due to non-registration||-||200 000|
|Waste management penalty due to failure to supply data||-||200 000|
|Total burdens (HUF)||100 000||765 000|
|Opportunity cost||-||665 000|
|Opportunity cost (percent)||665 percent|
The penalty items above marked with * increase proportionately with the product charge payable.
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