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Navigating the EU Carbon Border Tax

UK businesses at risk ...


Posted by Roger Eddowes on 30/10/2023 @ 8:00AM

The Carbon Border Tax introduced by the European Union (EU) is poised to reshape the landscape of international trade, especially for businesses that have not adequately prepared for its implications ...

The Carbon Border Tax is a clear signal of the increasing importance of environmental considerations in global trade!

The Carbon Border Tax is a clear signal of the increasing importance of environmental considerations in global trade!

created by dall-e / open ai

This tax, officially known as the Carbon Border Adjustment Mechanism (CBAM), is designed to address carbon leakage by imposing charges on imports based on their carbon emissions. While the initiative is commendable in its efforts to combat climate change, many UK businesses are alarmingly unprepared for its impact.

The CBAM requires EU importers to submit quarterly declarations to customs authorities. This means detailing the carbon emissions associated with specific imported goods!

This mechanism will initially target imports like aluminium, cement, electricity, fertiliser, hydrogen, and iron/steel, along with some processed goods. UK businesses that export these goods to the EU, either directly or through subsidiaries, must ensure they provide this crucial CBAM data. The consequences of non-compliance are severe, with potential penalties and disruptions to the supply chain.

"One of the primary concerns is the looming first reporting
deadline on the 31st of January 2024!"

Many UK businesses, unfortunately, have not given these new regulations the attention they warrant. The result? A potential scramble to gather and report the necessary data as the deadline approaches. The repercussions of missing this deadline or providing inaccurate data could be detrimental, leading to significant penalties and potential customs clearance issues.

Furthermore, the Carbon Border Tax is not just about reporting. It's a reflection of a broader shift in global trade dynamics. UK businesses must re-evaluate their sourcing strategies, especially if they've been relying on 'cheaper' carbon-intensive raw materials. Incorporating such materials could adversely affect the competitiveness of their products in the EU market.

While the current focus is on the reporting requirements, businesses must not lose sight of what's on the horizon. The next phase, anticipated in January 2026, will introduce payment obligations. Moreover, the UK government is contemplating its own version of the carbon border tax,

"This will add another layer of complexity for
businesses importing goods!"

The introduction of the Carbon Border Tax by the EU is a clear signal of the increasing importance of environmental considerations in global trade. UK businesses, and indeed businesses worldwide, must adapt to this new reality or risk being left behind.

The time to act and prepare is now.

Until next time ...

Business Godparent


Would you like to know more?

If anything I've written in this blog post resonates with you and you'd like to discover more about the EU's new carbon border tax and how your business can be ready, it may be a great idea to call me on 01908 774320 and let's see how I can help.

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About Roger Eddowes ...


Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.

Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.