Chemical Excise Tax: What do business owner ex-pats need to know about this?

After being passed unanimously by the House, the new Superfund Excise Tax is set to be effective from 1st July 2022. The policies shall remain in effect until 31st December 2031. This is more of a reinstatement of the previous chemical laws.

In simpler words, sales and import of certain chemicals have become taxable. In the earlier Superfund Chemical Tax, some of these items were already included. The term Superfund was coined due to its close relation to the formation of the Hazardous Substance Response Trust. To know more about the reinstated Superfund Chemical Tax, contact US Tax consultants in Toronto. Avail of the best tax consultants in Toronto to drive all your worries away about the Chemical Excise Tax.

An Overview of Chemical Excise Tax

The Chemical Excise Tax, effective from July 1, 2022, to December 31, 2031 (unless extended) is expected to generate an estimated revenue of 14 billion Us dollars. While the huge amount of revenue will strengthen the economic background of the nation, it may have several commercial implications for the traders.

As an ex-pat chemical business owner, you should be well versed with the new policy. The Chemical Excise Tax includes a comprehensive list of 42 ‘taxable chemicals’ and 50 ‘taxable substances’. If you have a regular supply chain in the US, you must know the list by heart so that you can avoid unnecessary issues related to customs.

Calculations of the Chemical Excise Tax

The payable amount for ‘taxable chemicals’ will be calculated per ton basis. For instance, a tax to be applied on potassium hydroxide is 0.44 US dollars per ton. The amount is on the lower side. Whereas, the taxable amount per ton of petrochemical products like benzene is 9.74 US dollars. Depending on the chemical you are importing or selling, the taxable amount will be calculated.

Now, in cases of chemical compounds, how the Chemical Excise Tax will be calculated?

According to the IRS, if a compound contains more than 20% of a taxable substance in terms of chemical weight, a Chemical Excise Tax will be applied to the additional quantity. For instance, if X is a taxable substance and a compound contains 35% of X, then you have to pay taxes for the additional 15%.

How it affects ex-pats

The implementation of an excise tax always has an impact on the ex-pats. Federal business is highly dependent on internal laws and the reinstated Chemical Excise Tax will make ex-pats strategize the business model. If you are exporting a ‘taxable chemical’, you have to pay the excise tax as per the new policy. The same goes for taxable substances.

The complex nature of the law and the challenges of calculations may leave you puzzled initially. However, there is some good news for you. A pool of ex-pats tax consultants in Toronto is ready to explain every little detail of the law for a better understanding. For hassle-free Chemical Excise Tax payment and refund, contact the international tax consultancy service in Toronto today.