The extended producer responsibility (EPR) scheme, which will go into effect in July 2023, will affect entities’ lives more profoundly than many people realize today, but there is also less time to prepare as the deadline draws near. Even if there are still a number of unresolved concerns, it is evident that the new EPR will significantly increase the administrative burden on many businesses that must pay the cost because the environmental product tax is not going away.
The environmental product charge system will change as a result of the new EPR fee.
The product streams—the product groups covered by the scheme—that are subject to the EPR charge are specifically identified in the decree laying out the exact requirements for extended producer responsibility (EPR).
Companies subject to the EPR fee include those that are currently required to pay the product charge, companies that transfer circular products into Hungary for free or in exchange for payment, companies that import the product from abroad for domestic use or for sale, and companies that purchase packaging and resell it along with their products. (Important: The party selling its product in the cardboard box is responsible, not the company that made the box.)
packaging for some single-use and other plastic products, product flows, and circular products:
flexible food containers, bags, or wrappings; beverage containers with a maximum three-liter capacity; beverage cups; light-weight plastic carrier bags; wet wipes; tobacco products with filters; fishing equipment.
Vehicle tires, office paper, commercial printing paper, cooking oil and fat, electrical and electronic equipment, batteries, and accumulators, textile products, wooden furniture, and so on.
This demonstrates unequivocally that virtually all products subject to the environmental product charge are included in the EPR product streams.
The product charge regulation was amended at the same time as the EPR was introduced, allowing for the possibility of deducting the EPR fee when calculating the product charge liability, in order to avoid double payment for the same product groups – both product charge and EPR fee would have to be paid for the same product.
Fees and administration are charged twice.
By examining the regulations, it is evident that anyone who is now impacted by product charge liabilities will unquestionably be charged the EPR price. Naturally, only one of the two fees will be due, but even if the regulations only call for the business to pay the EPR fee, they will still impose registration, disclosure, and payment duties on the entity.
You are correct to believe that the same product stream has a dual registration and declaration requirement. Entities that have already paid a product charge and will later pay an EPR fee are not exempt from the duties associated with the product charge.
likely that the EPR fee will be greater than the product charge that was previously paid on the product. As a result, in the product charge filing, you only need to state that no product charge was paid on the product based on the EPR liability.
The future implementation of EPR may raise a number of concerns, but entities do not have much time to consider these because of the short amount of time allowed by the legislation. Let’s examine what EPR-affected businesses must do.
The initial stage for businesses is to determine how much EPR liability they are affected by.
- Mandatory registration, first by the end of April, companies must register with MOHU.
On the MOHU website, you may find comprehensive information about the registration procedure, which is now in progress.
2. Registering and storing records system
Entities affected by the EPR must apply for registration with the waste management authority by May 31 after the MOHU registration, however, this is not currently possible. All parties involved should set up their record-keeping systems so they are ready to trace the flow of the pertinent products beginning on July 1 after a successful registration.
- Consistent EPR fee payment
When the first EPR fees are received at the conclusion of the third quarter, the first declaration is anticipated to be submitted.
The variety of goods and businesses susceptible to EPR has grown substantially, but many businesses are still unaware of it!
RSM has shown that a sizable percentage of companies are still unaware of the EPR system and the responsibilities it involves.
This is especially true for organizations that were not previously subject to the product charge but are now impacted by the new product streams that are subject to EPR, such as textiles and furniture.
This is a brand-new program for them, bringing with it not only administrative work but also financial responsibilities. The EPR system defines textile products as a relatively broad category, and in addition to the makers, all organizations that import such goods from abroad with the intention of reselling them or using them for internal use are also affected.
An excellent illustration of the concerns around the new EPR cost is packaging materials. Packaging materials have been the largest product stream impacted by the payment of the product charge. The EPR also has an impact on this product stream, although it differs depending on whether the business produces packaging or manufactures it.
Until recently, when selling packaging supplies to businesses that used them to package their products, the material’s manufacturer was responsible for paying the product charge.
The entity that generates packaging, i.e., the entity that packages and sells its product using the packaging material bought, is now required by the EPR to pay the charge. These entities were not previously subject to the product fee, therefore the EPR is a new duty for them that many people, in my opinion, are not yet aware of.
Additionally, the aforementioned regulation is not absolute, thus it is strongly advised to obtain guidance on the evaluation of the product charge and EPR consequences of packaging to prevent any misunderstandings in the future.
The Hungarian Tax Authority will be replaced by the Waste Management Authority and MOHU.
Furthermore, it is intriguing and especially pertinent to the EPR that, as long as the Hungarian Tax Authority coordinated the product charge, the EPR has little to do with it.
The waste management authority is in charge of the authority tasks and oversees the EPR obligations. This organization is where organizations must register and where quarterly reports are submitted. However, the concessionaire MOHU must get the EPR charge instead of the authority.
In other words, a fee that was previously paid to the government’s general fund has been moved to the concessionaire in charge of garbage disposal.
Since the waste management authority hasn’t, in my opinion, yet encountered the massive registration and filing activities to be expected in the system, it is questionable how it will handle the task given that the Hungarian Tax Authority has considerable experience managing the obligations of hundreds of thousands of taxpayers.