Environmental news - Deloitte United States...© 2018 Deloitte Consulting LLC Environmental news 9 Ministry of Finance developed a bill on environmental tax The Ministry proposed adding

Environmental news

November 2018

Environmental news© 2018 Deloitte Consulting LLC 2

Table of contents

Introduction 4

Ministry of Finance developed a bill on environmental tax 9

Environmental tax 8

Rosprirodnadzor clarified certain statutory production and consumer waste handling provisions 11

Ministry of Natural Resources will establish an integrated waste management operator by end of 2018 11

Ministry of Industry and Trade develops recycling incentives 11

Russian Ministry of Natural Resources and Environment will reconsider environmental duty rates 6

Russian Government approves environmental duty collection clamp-down 6

Procedures for declaring volumes of goods and packaging put on the Russian market were clarified 6

Waste management regulations 10

Extended producer (importer) responsibility 5

Russian Government made changes to the rules of reporting on meeting recycling requirements 7

Ministry of Natural Resources proposes to create Management Company in the waste market 11

Russian Government approves environmental duty rates for certain goods and packaging categories 6

Extended producer (importer) responsibility

Waste management regulations

Other legislative news

Contacts

Analysis of past court practice cases

Environmental tax

Deloitte’s periodicals

Introduction


Table of contents

Failure to file EPR reports 13

Analysis of past court practice cases 12

Untimely filing of EPR reports and environmental duty payment 13

Failure to file EPR reports for packaging 13

Failure to confirm recycling of goods (packaging) 13

Failure to file EPR reports and pay environmental duty 13

Other legislative news 14

Industrial environmental control requirements are approved 15

Rosprirodnadzor approves format of pollution charges declaration 15

Ministry of Natural Resources approved the “List of polluting Category I facilities that generate at least 60 percent of the total emissions and discharges in the Russian Federation” 15

Applicability of best available technologies expanded 15

Russian Government approved the list of open environmental data to be released online 16

Deloitte’s periodicals 17

Contacts 18

Ministry of Natural Resources has published a draft procedure of a program to improve environmental efficiency 16

The procedure for advance payments for negative impact on the environment may be changed 15




Contacts


Environmental tax


Introduction


In 2018, the law on the extended producer (importer) responsibility (EPR) was amended to refine the procedures for product (packaging) declaration and environmental duty assessment. The main objectives were to strengthen control over the accuracy of assessment and payment of the duty and ensure compliance with the recycling reporting requirements.

Russian Government approves environmental duty rates for certain categories of goods and packaging. Last but not least, the Ministry of Natural Resources proposed raising the environmental duty rates for certain product categories. For more details, please refer to the Extended Producer Responsibility section.

A number of changes were made to the environmental legislation, primarily concerning waste management and the possible introduction of an environmental tax.

The Russian Ministry of Finance proposed supplementing the Tax Code with a new chapter entitled “Environmental Tax” and developed a bill to that effect. The initiative was met with a mixed reception. Some believe that the new tax will help streamline the existing environmental charges and simplify their administration without increasing the burden on the business. The critics say that it is aimed at facilitating fiscal administration, rather than giving a boost to the waste recycling industry.

The Ministry of Natural Resources underlined that it had not been involved into the development of the bill. For more details, please refer to the Environmental Tax section.

There were several other legislative initiatives concerning the consumer and production waste, aimed at fostering waste recycling and creating a single waste management operator.

Tatiana KofanovaDirectorTax&Legal

[email protected]

Introduction




Contacts


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Introduction






Contacts


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Introduction


Russian Government approves environmental duty rates for certain categories of goods and packaging

The Ministry of Natural Resources has raised the environmental duty rates for each group of goods and packaging that generate recyclable waste (see Russian Government Resolution No. 284 of 09 April 2016).

Here are a few examples of the new rates:

• for Group 37 “Primary cells and primary batteries” the duty is RUB 33,476 per tonne,

• for Group 40 “Other electronic and electrical wires and cables” – RUB 2,423 per tonne,

• for Group 41 “Electrical lighting equipment” – RUB 9,956 per tonne,

• for Group 46 “Internal combustion engine filters” —RUB 3,037 per tonne.

Russian Ministry of Natural Resources and Environment will reconsider environmental duty rates

The increase also applies to a number of new goods (packaging) categories:

• for Group 38 “Lead batteries” the duty is increased from RUB 2,025 to RUB 27,320 per tonne

• for Group 46 “Internal combustion engine filters” —from RUB 3,037 to RUB 25,291 per tonne

• for Group 47 “Steel packaging” and Group 48 “Aluminium packaging” —

from RUB 2,423 to RUB 20,000 per tonne

The rates will be repeatedly raised for some other groups of goods and packaging, in particular:

• For Group 21 “Plastic packaging” — from RUB 3,844 to RUB 10,432 per tonne

• For Group 29 “Barrels and similar containers of ferrous metals” — from RUB 2,423 to RUB 20,000 per tonne.

The changes will apply as of 1 January 2019.

Procedures for declaring volumes of goods and packaging put on the Russian market were clarified

Regulation “On declaration of recyclable finished goods and packaging put on the Russian market over the past calendar year” was amended to clarify that:

• The goods and packaging exported from Russia do not need to be declared

• Reusable package must be declared as a product item

On top of source or customs documents, the declaration should be based on the shipping documents data.

Copies of such documents must be provided upon Rosprirodnadzor’s request within 10 business days.

The weight of packaging must now be indicated for each packed item in kilograms rounded to the nearest kilogram (previously it only applied to goods).

If a legal entity or a sole trader is at the same time a manufacturer and an importer of goods, a declaration should be filed with Rosprirodnadzor.

The declaration format was updated.

Russian Government approves environmental duty collection clamp-down

The environmental duty on packaging will be paid by the producers and/or importers of packaged goods.

For non-ready-to-serve packaged products, the environmental duty will be charged on the packaging only.

The accuracy of duty calculations and timeliness of payment will be controlled by the environmental duty administrator (Rosprirodnadzor and its territorial branches).

The duty calculation accuracy will be checked by reconciling the data and estimations filed by the payer with the attached supporting documents and the environmental duty regulations.

Rosprirodnadzor will be authorised to approve the relevant control forms and procedures (both for hard-copy and electronic filings).

The guidelines also regulate the filling of the above-mentioned control forms, provision of necessary explanations, and making corrections in such forms, should any data errors, discrepancies or inconsistencies be revealed.




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Introduction


Russian Government changed rules of environmental reporting

Reports should reflect the volume of goods, including packaging, released into the Russian market in the year preceding the reporting year.They should be based on the information contained in the declaration of recyclable finished goods and packaging for the respective year.

The form of the report on compliance with the recycling requirements (disposal ratio) was updated, too.

The Association of Producers and Importers, as a legal entity, has the right to provide explanations and make corrections to the submitted reporting forms.

Producers and/or importers of goods that are non-ready-to-serve products (sold as components or raw materials for the production of other goods, for which the environmental duty is payable) will be required to report only the packaging of such goods.

The changes enable meeting the disposal ratio by recycling any waste from the use of same-purpose goods or packaging or using the same processing method.




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Environmental tax




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Ministry of Finance developed a bill on environmental tax

The Ministry proposed adding a special chapter to the Tax Code to regulate the new tax.

If introduced, the environmental tax will be paid by the companies or individuals whose mainland, offshore or exclusive economic zone operations are proven to have a negative environmental impact.

The tax will be charged for an adverse environmental impact resulting from:

• Emissions from the stationary sources of air pollution

• Discharge of wastewater containing polluting substances into waterbodies

• Generation, storage, dumping, accumulation, placement of production and consumption waste of each hazard class

The taxable base will be determined as a total of pollutants emitted/waste generated.

The tax rates will depend on the type of pollutant and waste hazard class.

The rates will be lower for the taxpayers that take impact mitigation measures and apply the best available technologies.

Conversely, exceeding the pollutant emission/waste accumulation limits will entail higher charges.

The tax period for the environmental tax will be a calendar year, during which advance payments will be made.

The bill permits deduction of expenses incurred to mitigate the negative environmental impact (up to 70 percent of the tax payable for the respective year).

The environmental tax is seen as a replacement of the existing pollution charges.

In its clarifications of 14 August 2018, the Ministry of Finance said the environmental tax will not increase the tax burden as its rates will be consistent with those of the pollution charges.

If adopted, the law will enter into force on 1 January 2020.




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Contacts


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Rosprirodnadzor clarified certain statutory production and consumer waste handling provisions

The entities whose only activity is the transportation of waste do not collect waste and, therefore, do not have to obtain waste collection licences.

The licensing authority may initiate an extraordinary document check if a company licensed to collect I‒IV Hazard Class waste terminates its activities and applies for re-licensing.

A licensee may apply for the (re)issue of a license for a particular waste category and hazard class.

Pollution charges will not be imposed for the placement of solid waste in 2016 and 2017.

Pollution charges offsets and overpayment returns will be handled by the territorial branches of Rosprirodnadzor on the basis of payor’s requests, supported with documentary evidence and documents required for payment reconciliation.

Ministry of Natural Resources will establish an integrated waste management operator by end of 2018

A government-controlled entity will be established by a presidential order or based on a federal law and will be in charge of liaising with the regional operators.

Ministry of Industry and Trade develops recycling incentives

A bill to that effect proposes:

• Setting forth procedures for establishing holders of waste stored in containers, SMW locations, and other sites by the regional waste management operators

• Extending the application of Federal Law “On Production and Consumer Waste” to certain types of food waste classified as bio-waste

• Entitling food waste holders to decide on recycling such waste (including for agricultural and consumer production purposes)

Ministry of Natural Resources proposes to create single waste operator

The Ministry of Natural Resources prepared a bill on the establishment of a state-owned company to set up an integrated system of solid communal waste (SCW) management.

The waste operator will receive asset contributions from the state along with income from participation in investment projects and commercial organisations.

It will develop a unified SCW database of SCW, consolidating the data on capacities, disposal sites, transportation routes, and planned new facilities (for processing and disposal of waste). At the same time, the Management Company will be the operator of this scheme.

The new company will coordinate the regional waste management efforts, development of incentives, implementation of state programmes, making proposals for the state waste management policy improvement.

It will also administer the environmental tax revenues after it has replaced the environmental fee after 2020.




Contacts


Environmental tax


Introduction

http://www.consultant.ru/document/cons_doc_LAW_19109/






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Introduction


No new EPR cases have been considered recently. Read on for a review of cases since 2016.

Failure to file EPR reports

A company failed to file the required packaging reports, citing its not being a producer or importer of recyclable goods.

According to the law, the end-of-life recycling of packaging is an obligation of producers (importers) of the goods the packaging is used for.

The court established that the company imported goods in cardboard packaging.

The “List of finished products subject to end-of-life recycling” includes paper and cardboard packaging (Group 13).

The company was found guilty of an offence envisaged by Article 19.7 of the Russian Administrative Tax Code.

Untimely filing of EPR reports and environmental duty payment

A company produced food products that were sold in:

• Corrugated paper and cardboard boxes

• Ethylene polymer bags

• Unfolding cardboard boxes

• Boxes, crates, baskets, and similar plastic containers

• Plastic bottles

After an audit, Rosprirodnadzor established that the company failed to timely file the required reports.

The company filed hard copies of the reports with a branch of Rosprirodnadzor on 27 April 2017 and paid the environmental duty on 25 April 2017 (vs. the deadline of 15 April 2017).

The company was found guilty of an offence under Article 8.2 of the Russian Administrative Offences Code, but was further released from liability due to the insignificance of the offence (Article 2.9 of the Russian Administrative Offences Code).

Failure to file EPR reports for packaging

The company produced food products and re-packaged them into glass bottles, cans, and laminate bags.

The company failed to pay the environmental duty and file the mandatory reports.

The court found that the company failed to

• file a declaration on the volume of goods and packaging put on the market and a report on meeting the recycling targets

• The company neither submitted the calculation of the environmental duty for the previous year nor paidthe environmental duty on packaging, i.e. failed to fulfill its obligations as a trademark owner

The company was found guilty of an administrative offence envisaged by Article 8.1 of the Russian Administrative Offences Code and was assessed administrative penalties.

Failure to confirm recycling of goods (packaging)

A company submitted the mandatory reports indicating that the recycling oblligationswere fulfilled by handing the recyclable waste (corrugated cardboard) over to a sole trader, which was confirmed by the following documents:

• Contract for the transfer of waste

• Letter from the sole trader confirming waste recycling

• Waste recycling report

The court found that the sole trader did not recycle the waste handed over to him.

The environmental duty calculation was reviewed by the court and was not challenged.

Under the circumstances, the court adjudged to recover the outstanding environmental duty from the company.

Failure to file EPR reports and pay environmental duty

A company used wooden pallets to package and deliver ceramic products to its customers.

The company failed to fulfill its filing obligations.

The court found that the wooden packaging cannot be classified as waste, but belongs to ‘other unusable natural wood products’ (FCCW code 40419000515), based on the draft standards for waste generation and placement limits and the technical report for 2016.

The court imposed penalties on a company’s officer as per Article 8.2 of the Administrative Offences Code.




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Contacts


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Industrial environmental control requirements are approved

Legal entities and sole traders operating Category I, II, and III facilities should develop an industrial environmental control policy for each facility, taking into account the category, applied technologies, production process specifics, and the negative environmental impact.

The order sets forth the mandatory parts and data to be included into the policy, the reporting procedures and the deadlines.

The report must be filed annually by 25 March of the year, following the reporting year.

The entities/sole traders that operate Category I,II, and III facilities which are subject to the federal environmental control will file reports with their local Rosprirodnadzor’s branch, while the entities operating the facilities subject to the regional environmental control will be filing reports with the respective regional executive body.

Rosprirodnadzor approves format of pollution charges declaration

The pollution charges declaration will have to be filed before the expiry of the pollutant emission and discharge permits received

by legal entities and sole traders operating Category II facilities.

The document sets forth the requirements to filling in the declaration.

If approved, the order will enter into force on 1 January 2019.

The procedure for advance payment of environmental fees may be changed

A bill is pending with the State Duma, aimed at refining the procedure for advance payment of environmental fees, depending on the payment method selected:

• 1/4 of the fee for paid for the previous year

• 1/4 of the fee calculated based on the volume and/or mass of permissible emissions

• part of the fee calculated based on the environmental monitoring of production processes in the previous quarter of the current reporting period.

The payers will be able to select a payment method for each type of negative impact on the environment, for which a fee is charged. The method will be indicated in the declaration submitted to Rosprirodnadzor.

If adopted, the law will enter into force on 1 January 2019.

Ministry of Natural Resources approved the “List of polluting Category I facilities that generate at least 60 percent of the total emissions and discharges in the Russian Federation”

The list includes 300 facilities. These companies are required to apply for a comprehensive environmental permit from 1 January 2019 to 31 December 2022.

Applicability of best available technologies expanded

The best available technologies can now also be applied to mitigate the environmental impact from coal transshipment.




Contacts


Environmental tax


Introduction


Ministry of Natural Resources published draft requirements to programme for improving environmental efficiency

In particular, it proposes to determine the requirements for the structure of the program to improve environmental efficiency, the materials of its justification and the procedure for its development.

Such programme will be mandatory for development, if a taxpayer cannot comply with the emissions requirements. It will be required to outline an action plan towards bringing the activities at facilities of Hazard Categories I and II categories in compliance with the demands of the environmental legislation.

The program will be developed for a period of up to seven years and for large enterprises that meet the criteria — up to 14 years.

The document contains requirements to the format of the programme and a procedure for its approval by an interdepartmental commission.

If adopted, the project will enter into force on 1 January 2020.

Russian Government approved the list of open environmental data to be released online

In particular, Rosprirodnadzorwill disclose the following data:

• Registers of waste placement sites and polluting facilities

• Database of waste, recycling, and decontamination technologies

• Reports on waste-generating facilities

• Pollutant emission (other than radioactive) permits

• Register of Hazard Class I-IV waste transporting, treatment, recycling, decontamination, and placement licences

• Pollutant emission (other than radioactive) permits




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Contacts

Tatiana KofanovaDirectorTax and [email protected]

Julia PeregudovaManagerTax and [email protected]

Darya DobrovaConsultantTax and [email protected]




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Environmental news - Deloitte United States...© 2018 Deloitte Consulting LLC Environmental news 9 Ministry of Finance developed a bill on environmental tax The Ministry proposed adding