• Service: Tax
  • Type: Survey report
  • Date: 4/25/2013

Material resource efficiency & waste management 

Taxes on waste to landfill have been common in Europe since the 1990s. Over the last two decades, governments around the world, both national and local, have become more innovative in using their tax codes and other fiscal instruments to conserve material resources, reduce waste (including packaging) and encourage the reuse and recycling of waste materials.
France 1
China 2
Belgium, South Korea, UK 3

Source: The KPMG Green Tax Index, 2013.

That said, however, tax approaches related to material resource conservation and waste reduction tend to be penalty-led. France, for example, leads the ranking in this category on the basis of several different penalties imposed on waste. China is unusual in that it imposes taxes on mineral resources.

Around one quarter (5) of the countries analyzed for this Index offer incentives for efficient use of materials or waste recycling as part of their national tax code. They are South Korea, China, Brazil, South Africa and the US. Notably, European countries appear to focus on penalties rather than incentives in this area.


France has the most penalties and no incentives in this space, and therefore scores most highly among the material resource Index scores (for the purposes of this Index penalty scores are weighted by a factor of 2 to reflect the fact that compliance is obligatory). France imposes a tax on the removal of refuse from buildings liable to property tax (except factories), a tax on the recovery and elimination of paper waste and a tax on the recovery and elimination of electronic waste.

The tax on paper waste is paid by every organization that produces or imports more than five tons of printed paper. In 2013, the tax rate was EUR48 (USD62) per ton produced in 2012. In addition, every business that produces, imports or introduces electric and electronic equipment on the national market must contribute to the collection and the elimination of waste equipment.

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Tax penalties enforced by revenue agencies on minerals are uncommon among the countries analyzed for this Index, although one of the most striking examples is the announcement by China in 2012 of increases in resource taxes on six minerals, including iron and tin ore. Reports attributed the increases to China’s policy objective of conserving domestic mineral resources and the environment.

The Chinese government’s levy on tin ore rose 20-fold to between CNY12 and CNY20 (USD1.95 to USD3.25) per ton depending on the grade. The tax on iron ore also rose from 60 percent of the iron ore base rate to 80 percent,1 while similar increases were imposed on molybdenum, magnesium, talc and boron.

Various tax incentives are also available in China. For example, revenue derived from the manufacture of products that are in line with state industrial policy and involve “synergistic use of resources” may be reduced to 90 percent of actual in calculating the taxable income of enterprise. In 2011, China reduced or eliminated VAT on goods produced from recycled materials in order to promote the circular economy. VAT refunds range between 50 and 100 percent. Qualifying goods include sand produced from construction waste, powdered rubber made from obsolete tires and electricity or heat produced from organic waste.2

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Belgium both penalizes and incentivizes behavior related to material resources and waste. Firstly, Belgium applies tax penalties to a wide range of material goods including beverage packaging, disposable cameras (unless 80 percent can be recycled), batteries and disposable cutlery. In addition, the country offers a 3 percent tax deduction for companies that acquire new tangible or intangible fixed assets that contribute to the recycling of packaging.

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South Korea

A number of tax incentives are available in South Korea related to materials, packaging and waste. For example, a tax credit is available for mid-size companies that provide waste treatment or recycling services. The tax reduction is calculated as a percentage between 5 percent and 30 percent of the taxable income of the company depending on the type of service provided. This provision stops on 31 December 2014.

In addition, a business that purchases waste materials or used cars from a VAT-exempt entity (such as the government) and reuses them in further manufacturing processes is entitled to recover a deemed input VAT.

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The UK imposes an aggregates levy, introduced on 1 April 2002, which is a UK-wide tax on the commercial exploitation of virgin aggregates, namely rock, sand and gravel. The levy aims to encourage efficient use of virgin aggregate materials and increased use of untaxed alternative construction materials such as recycled construction and demolition waste.

The UK also imposes a per-ton landfill tax on waste going to landfill.

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Other material resource and waste penalties and incentives

Other notable tax instruments applicable to material resource conservation and waste reduction include South Africa’s Section 37B of the Income Tax Act. This provides an allowance for costs incurred in acquiring new environmental treatment, recycling or waste disposal assets.

For waste treatment and recycling assets, a capital allowance of 40 percent of the cost is available in year one and a further 20 percent per annum for the subsequent 3 years. For waste disposal assets, the cost can be written off in a straight line over 20 years at 5 percent per year.


In the US, corporations can benefit from accelerated depreciation of 50 percent of the adjusted basis of assets purchased for the reuse and recycling of waste materials.

The Netherlands abolished its Packaging Tax in 2013 in favor of a Packaging Waste Control Levy payable by companies that introduce more than 50,000 kilos of packaging onto the Dutch market.

In Brazil manufacturers benefit from a tax credit on the acquisition of certain waste materials if they are to be recycled into new products. Eligible waste materials include plastic, paper, glass and various metals. The tax credit is calculated according to a defined percentage of the IPI (federal sales tax) rate.

Landfill taxes are relatively common across the globe, on a national and sub-national level. As examples, Finland taxes EUR50 (USD65) per ton, Japan taxes per ton of industrial waste at a rate set by local governments, and Mexico City taxes commercial waste per kilogram in excess of 50kg.

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Non-tax incentives

Various non-tax incentives and grants specific to material resources and waste are also available around the world.

For example, Australia's Australian Packaging Covenant is an agreement between companies in the supply chain and all levels of the Australian government to reduce the environmental impacts of consumer packaging by encouraging improvements in packaging design, higher recycling rates and better stewardship of packaging. Grants are available to industry to focus on initiatives related to glass, plastics and recycling programs. Over AUSD6.1 million (USD6.3 million) in funding has been provided to 40 new projects in the 2012-2013 fiscal year.

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Sub-national initiatives

Mexico City provides one example of waste-reduction tax incentives offered by municipalities. Since 3 years ago, the city has granted a tax credit to corporations that recycle or reprocess their solid waste. The credits are offered on a sliding scale from 20 percent of payroll tax to those who recycle or reprocess from 33 to 44 percent of their waste, up to a credit of 40 percent of the payroll tax to those who recycle or reprocess between 60 and 100 percent of their solid waste.

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1 Accessed 21 March 2013.

2 Accessed 21 March 2013.


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