The anti-deforestation regulation

The anti-deforestation regulation: the trees, the forest and the impact

ContributorName(contributor, true)
By:
insight featured image
On 6 December, last, negotiators from the European Parliament and the EU-Member States concluded an agreement on a directive regarding the import of products that pose a threat of deforestation.
Contents

Sustainable tax

Grant Thornton's Tax Sustainability team assists organisations by providing insights into available taxes, grants and compliance requirements. We would be happy to assist your organization in designing and implementing a sustainable tax strategy.

Which products does the regulations regard?

These include products such as cocoa, coffee, soy, palm oil, wood, live cattle and rubber, but also derived products such as leather, chocolate, furniture, paper, beef and charcoal. The import of products that contribute to deforestation will be banned in the European Union.

Obligations for companies 

Enterprises wishing to import their products into the EU must declare that their ingredients do not contribute to forest destruction. The regulation rules that products are prohibited, and therefore cannot be imported, if they come from arable land that has been deforested after 31 December 2020.

Importers must demonstrate where the raw materials come from, using "precise geographic information about the agricultural land". Satellite images and GPS coordinates must be provided at the time of import of the place where the raw material of the goods to be imported originates. The situation as per the time of delivery and as of 1/1/21are to be compared, so that it can be established that the products have not been obtained through deforestation. It must also be demonstrated that the rights of indigenous people have not been violated.

Sanctions 

Failure to comply with these rules can lead to fines of up to four percent of an enterprise’s turnover in an EU country. In addition, the turnover realized with such products can be confiscated. In this case, “wrong” products can be refused at the border and confiscated by the authorities. As a last resort, a company can be temporarily excluded from public tenders.

Planning 

The regulation is expected to enter into force in 2023. Importers of such products are then given 18 to 24 months (depending on the size of the company) to get their affairs in order so that they can comply with the regulations.

The EU countries will check the rules on the spot. In doing so, they will make an assessment of the countries with the greatest risk of deforestation for the goods to be imported and the most risky sectors.

An evaluation of the scheme will take place after two years. Perhaps then wetlands and savannas will be considered “forest” to be protected and corn and biodiesel will be added to the list of “deforestation-free” products.

Because this regulation is new, not all details are known yet. This new regulation will ensure that companies that import goods that fall under the categories mentioned above will have to set up a new administration to avoid sanctions.

Contact us if you have any questions

Do you need help with the impact of this anti-deforestation regulation on your company or do you have other questions about this? ? feel free to call or mail us please. We like to help you..