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Plastic packaging tax to be introduced in 2022

Author: Prinal Nathwani, Holly Grantham and Jayne Harrold

Published: 06 Dec 2021

Plastic packaging tax to be introduced in 2022 article image

Just months out from new plastic packaging taxes, businesses need to be ready for government measures to reduce plastic use and pollution. Prinal Nathwani, Holly Grantham and Jayne Harrold take a look at the proposed regimes in the UK and in Spain and Italy.

Introducing the plastic packaging waste levy on its website, the European Commission says: “This is expected to encourage Member States to reduce packaging waste and stimulate Europe’s transition towards a circular economy by implementing the European Plastics Strategy”.

The EU is clear that the levy, to be collected as an own resource and payable by member states, is closely linked to its policy priorities when it comes to the Green Deal. The introduction of the levy and related taxes is part of a broader shift towards producer responsibility, reflecting a growing focus on tackling pollution and plastic waste, and anticipated to be a precursor to further regulation.

Given the requirement for member states to pay the levy, certain member states have sought, or will seek, to cover the cost through new taxes. Italy and Spain, for example, are set to introduce their own taxes on plastic products.

Although no longer a member of the EU, the UK is introducing its own plastic packaging tax (PPT) from 1 April 2022.

While the policy objective behind the UK, Italian and Spanish taxes is broadly the same – to stimulate use of recycled plastic in the respective national markets – there are differences in scope and application for businesses operating in these markets to navigate. This article sets out to demystify some of the detail and give an insight into actions that can be taken now to ensure tax readiness.

Timing of introduction

At the time of writing, the UK PPT is to be introduced with effect from 1 April 2022 and the primary legislation is contained in Finance Act 2021 (FA 2021).

While both the Italian and Spanish taxes were intended to be introduced in July 2021, both have been delayed. In light of ongoing discussions in Spain’s parliament, Alfonso Viejo, Indirect Tax Partner at PwC Spain, considers that summer 2022 is more likely as an introduction date. In Italy, Francesco Pizzo, Indirect Tax Director at PwC Italy, notes that further to increasing calls for a deferment of the tax, the introduction date has recently been pushed back to 1 January 2023.

Although there have been ongoing changes in relation to timing in Italy and Spain, Pizzo says: “Significant investment is required from businesses to prepare for implementation, and a deferment should not be taken as an invitation to delay tax readiness.” Whether in Spain, Italy or the UK, when it comes to PPT, businesses need to take action now.

Tax rates

PPT in the UK is set at a rate of £200 per tonne of plastic packaging components that have less than 30% recycled content. The tax in Italy and Spain applies at a rate of €450 per tonne of virgin/non-recycled plastic utilised in products falling within the scope of the tax.

What is in scope?

UK: the UK PPT is a tax on plastic packaging (including ‘filled’ packaging, ie, any goods in packaging) that is imported, or manufactured or finished in the UK and that does not contain a minimum of 30% recycled content.

Italy: the Italian tax on plastic covers single-use plastic manufactured goods made wholly or partially of organic polymers of synthetic origin, created for the purpose of containment, protection, handling, or shipment of goods or foodstuffs, and which are not intended to be reused. Such products are described as ‘MACSI’ in the Italian provisions and include bottles, bags and food containers.

Spain: the Spanish tax on plastic applies to non-reusable packaging that contains plastic, semi-finished plastic products that are used in the manufacturing of the packaging, as well as any plastics that are used for the closing, commercialisation or presentation of single-use plastic packaging.

Despite the fact that the three regimes are broadly the same in designating the importer of chargeable material the taxable person, the position varies when it comes to manufacture. Specifically, the tax point for UK purposes is when a finished packaging component is manufactured. In contrast, a tax point only arises in Italy and Spain on the first supply of this manufactured chargeable material in the respective country.

Exemptions and exclusions

As with other indirect taxes, the regimes in the three countries build in a system of exclusions and exemptions to align the tax outcome with the policy rationale. For example, in Italy, there is an existing exemption for the packaging of medical devices. However, there are calls from the food industry for an exemption for products where food regulations mandate the use of virgin plastic.

The Spanish provisions exempt, for example, plastic packaging for medicines, sanitary products, food for special medical purposes or infant formula for hospital use.

There are five exemptions provided for in the UK in FA 2021. There is an exemption for transport/tertiary packaging on imports of packaged goods (for example, pallet wrap to secure consignments of products to pallets) and the immediate contact packaging of licensed human medicine. In addition, the UK has proposed to explicitly take three categories of products, which would otherwise be taxable, outside of the scope of the tax to align the outcome of the tax with its purpose – namely:

  • products where the packaging function is secondary to the storage function for the end consumer (such as toolboxes and glasses cases);
  • products that form an integral part of the goods without which the goods cannot be used or consumed (such as inhalers and printer cartridges); and
  • products that are designed to be used many times for the presentation of goods (such as shop fittings and sales presentation stands).

There are also provisions that explicitly bring into scope single-use products used by the end consumer for packaging for any commodity or waste – for example, bin bags that perform a packaging-type use for waste and party cups used for drinks.

Manufacturers and importers of these products therefore also need to be preparing for the introduction of the PPT.

What are the compliance requirements and where are businesses facing challenges?

In the UK, FA 2021 provides that a business needs to register for PPT if it manufactures and/or imports 10 tonnes of plastic packaging within the scope of the tax in a 12-month period.

The Italian and Spanish regimes have a 5kg minimum threshold, which is likely to be surpassed by most businesses.

Assessing liability and collating the necessary data can be challenging for businesses with complex supply chains.

Once the liability and scope has been determined, businesses will need to consider the data and information required in order to meet compliance obligations. In Spain, businesses will have to sign up to a specific plastic tax register and Spanish manufacturers will be obliged to keep separate e-accounting records through the tax authority’s web page for products and raw materials that are within scope of the tax.

Italy is expected to require quarterly or monthly PPT returns to be filed, and therefore data will need to be available not just on products that are in scope, but also the breakdown of these products, as the tax base is the volume of non-recycled plastic within those items.

The UK expectation is for quarterly returns, which will most likely require businesses to report quantities of taxable components manufactured or imported in the period, quantities of non-taxable components that meet the recycled content threshold, quantities of exempt components, and details of taxable components on which the tax is deferred or an export credit is claimed.

Granular and detailed records will need to be kept for all territories to evidence the basis on which the tax is determined, including weights of components, numbers of components, evidence of recycled content, and assessment of the materials making up a component where it contains multiple materials. Given that the tax is determined on physical items for which a taxpayer may not have direct oversight of the data, or where they are reliant on supplier data, it is likely to be challenging to collate sufficient and robust data. It is to be expected that there will be a degree of scrutiny from the tax authorities following implementation to ensure that the new taxes are being appropriately calculated and managed.

In addition, businesses will need to ensure adequate records are kept evidencing supply-chain due diligence and the verification of information received, in order to avoid being caught by the joint and several, and secondary, liability provisions included in FA 2021.


As with other taxes, the PPT compliance requirements in all three countries are underpinned by a system of sanctions. In the UK, a regime of administrative penalties for failure to comply with requirements runs in conjunction with the tax-geared penalties regime for a failure to register (Sch 41, Finance Act 2008), and for inaccuracies in documents (Sch 24, Finance Act 2007).

The Italian regime also builds in administrative penalties of two to five times the tax unpaid. Spain follows a similar approach and the applicable penalties can range from 50% to 150% of the unpaid tax, or €75 per invoice in case of missing or incorrect data.

What can businesses do?

With only months before the taxes go live (1 April 2022 in the UK), businesses should be focusing their efforts on steps to implement the taxes in practice. Given that these are new taxes requiring operational data that has never been needed before, the implementation exercise is a significant activity that touches most areas of the business. In our experience, and as shown in the chart below, this is a multidisciplinary exercise that needs to involve stakeholders from across the business.

Businesses need to be preparing for the new taxes now as governments push ahead with measures to reduce plastic use and combat pollution, while encouraging plastic producers, manufacturers and importers towards more environmentally sustainable materials.

Steps towards implementation of PPT



1 Discovery

Training stakeholders and project planning

Defining the problem:

  • What will fall under the business’s responsibility
  • Understanding existing information and systems
  • Identifying the  gaps between current state and compliance
  • Flagging of commercial considerations

2 Identification and determination

Product liability determination at component level

Identification of affected entities

Define stakeholders, master data and evidence requirements

3 Design

System-based tax coding or flags, define invoicing requirements, processes and procedures (including controls), people and responsibility, systems and technology

Decisions regarding automation and timeline and interim planning (if required)

4 Rollout planning

Planning, communication, counterparty management for go-live

Supplier due diligence and information requirements

Customer communication

Contractor communication, (eg, logistics and export evidence)

Review and/or renegotiate contracts

5 Testing and post go-live support

Testing of process and system configuration ahead of go-live, followed by support for the immediate period after go-live and the first return period


6 Monitoring, maintenance and change management

Continuous monitoring strategy and change management procedures to be adhered to

Document functional and technical design

Specify and put in place an internal audit process (eg, senior accounting officer)

About the author

Prinal Nathwani, Senior Manager and Solicitor 

Holly Grantham, Senior Manager and Solicitor

Jayne Harrold, Director and UK Environmental Tax Leader, PwC UK