The OECD Centre for Tax Policy and Administration, in cooperation with the European Commission, announced a public hearing on 15 November 2026 to explore how taxation can drive the circular economy. The hearing, held virtually and at OECD headquarters in Paris, will examine tax incentives for resource efficiency, waste reduction, and product lifecycle extension. Stakeholders including MNEs, environmental NGOs, tax authorities, and academia are invited to submit written contributions by 1 November 2026. The event aligns with the EU Circular Economy Action Plan and the OECD’s work on environmental taxation. Key topics include reduced VAT rates for repair services, accelerated depreciation for circular business models, and plastic packaging taxes.
Key Takeaways
- VAT Incentives for Repair and Reuse Services: The hearing will assess the impact of reduced VAT rates (as low as 5% under EU VAT Directive Article 98) on repair, refurbishment, and remanufacturing services. Early adopters like France and Austria report increased circular activity, but state aid and distortion risks remain.
- Accelerated Capital Allowances for Circular Assets: Proposals for enhanced first-year allowances on machinery enabling recycling, upcycling, and material recovery will be discussed. The OECD will evaluate whether such measures qualify as harmful tax subsidies under the BEPS Action 5 framework.
- Plastic Packaging Tax Expansion and Harmonization: Building on the UK Plastic Packaging Tax (PPT) and EU Plastic Levy, the hearing will explore a coordinated approach to taxing virgin plastic content. Harmonized definitions and credit systems for recycled content could reduce compliance costs for cross-border supply chains.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement