ESG Insights for Tax & Legal | July 2025

Welcome to our ESG Insights for Tax & Legal, keeping you informed of the latest developments in the fast-moving world of ESG!

This ESG Tax & Legal round-up features: 

1. Updated ESG Tax Tracker

2. NL CO2 tax pause

3. EU CBAM update

4. Global carbon pricing for shippin

5. NL Plastic tax update

6. Webcast: Decoding global tax transparency

7. European Commission publishes tax incentive recommendations

Enjoy the ESG Insights and please contact our ESG team for Tax and Legal, if you have any questions or feedback - we are happy to help you!

Merijn Betjes

1. Updated ESG Tax Tracker

We have updated the ESG Tax Tracker. The ESG Tax Tracker, provides insight into the global ESG and Sustainability landscape for taxes, incentives and grants. The ESG Tax Tracker, which is regularly updated, is based on our global ESG Regulatory Database, covers more than 80 countries and leverages off our global network and ESG specialists. Should you wish to obtain information about a jurisdiction that does not appear in the database, please contact one of the specialists listed at the right side of this page. 

Download the updated Tax Tracker

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2. NL CO2 tax pause

The Dutch government is considering pausing the existing CO2 tax on industrial emissions, which is currently enforced to charge industries based on their carbon emissions. The proposed pause, potentially starting in 2026 and extending until 2030, is driven by concerns that high energy costs might lead industries to relocate abroad, potentially harming the domestic economy. This pause could significantly impact the Netherlands' ability to meet EU climate targets and affect EU subsidies linked to climate initiatives. The proposal is still under discussion, with ongoing consultations between the government and industry stakeholders to fully assess its implications. 

Go to Kabinetsaanpak Klimaatbeleid

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3. EU CBAM update

The Carbon Border Adjustment Mechanism (CBAM) is evolving on two key fronts: the first set of simplification measures has been proposed, and the European Commission is consulting on a scope expansion. Both developments could impact import obligations, reporting requirements, and overall compliance strategies.

CBAM Simplification – Omnibus I Package
The Omnibus I regulation introduces a set of measures designed to ease compliance—particularly for smaller importers—while maintaining the integrity of CBAM’s climate objectives. A key change is the introduction of the de minimis rule, exempting importers with less than 50 tonnes of CBAM goods annually. Hydrogen and electricity are excluded from this threshold. The regulation also simplifies procedures for emissions reporting, authorisation, and third-party verification, clarifies financial liability rules and credit claims, and promotes the use of publicly available emissions data. It further sets out new technical provisions for secure data handling via the CBAM registry and refines the functioning of the central CBAM platform. Please click here to access the official documentation for further details. Finally, this is still a proposal, we expect the finalization later in 2025.

CBAM Scope Expansion – Public Consultation Open
In parallel, the European Commission is preparing a potential expansion of CBAM to include downstream products made from goods already covered by the mechanism. This aims to prevent carbon leakage and close current regulatory loopholes.

A public consultation is open until 26 August 2025, and all stakeholders—especially those importing processed or manufactured goods derived from iron, steel, aluminum, and other CBAM materials—are encouraged to provide input. You can access the consultation here.

What can you do?

• Reassess exposure: The de minimis exemption may remove some companies from scope, while others could be brought in once the expansion is adopted.
• Stay informed: The scope of CBAM is evolving—monitor developments to anticipate future obligations.
• Update internal processes: Ensure compliance workflows reflect the new simplified procedures.
• Engage in the consultation if downstream products are relevant to your business.

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4. Global carbon pricing for shipping

The International Maritime Organization (IMO) has introduced the Net-Zero Framework, a global initiative aimed at reducing greenhouse gas (GHG) emissions in the shipping industry through carbon pricing mechanisms. Adopted during the 83rd session of the Marine Environment Protection Committee (MEPC 83) in April 2025, this framework is designed to guide international shipping towards achieving net-zero emissions by 2050. It incorporates a hybrid system, reflecting a compromise among various proposals considered during its development, with two key measures: a Global Fuel Standard and a Global Economic Measure. The IMO Net-Zero Framework will be added as a new Chapter 5 of Annex VI (Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships (MARPOL), which currently includes 108 Parties, covering 97% of the world’s merchant shipping fleet.

Key Components of the Net-Zero Framework:

1. Global Fuel Standard:
   • The IMO Global Fuel Standard (GFS) targets ships over 5,000 gross tonnage engaged in international trade, which are responsible for about 90% of shipping emissions. It introduces the GHG Fuel Intensity (GFI) metric, measuring emissions per unit of energy used, including electricity and wind propulsion, using a well-to-wake approach. The GFS establishes two compliance levels:
     1. Tier 1 (Base Target): Requires an 8% reduction in GFI by 2030, 30% by 2035, and 65% by 2040.
     2. Tier 2 (Direct Compliance Target): Sets stricter targets of 21% reduction by 2030 and 43% by 2035.
   • Ships must meet the direct compliance target; exceeding it necessitates acquiring "remedial units" to balance emissions, while outperforming it generates "surplus units" for trade or offsetting.
2. Carbon Pricing Mechanism:
   • The Carbon Pricing Mechanism complements the GFS by financially incentivizing compliance with GFI targets. Ships that exceed GFI targets must purchase Remedial Units (RUs) as a penalty, with costs set at $380 per tonne of CO₂-equivalent emissions for those exceeding the base target, and $100 per tonne for those exceeding the direct compliance target but below the base tier.
   • Conversely, ships that emit less than the direct compliance target can generate Surplus Units (SUs), which can be traded or sold, creating a market-based incentive for adopting low-emission technologies.

Monitoring and Compliance:

• The IMO shall oversee the implementation of the framework, including the monitoring and control of Remedial Units (RUs) and Surplus Units (SUs).
• The IMO will administer the issuance and trading of RUs and SUs based on verified emissions data, thereby incentivizing vessel owners to adopt cleaner technologies and practices.
• Vessels are required to monitor and report their emissions data to the IMO, utilizing standardized procedures and third-party verification to ensure accuracy and compliance.
  • Reporting and trading activities are conducted on behalf of individual vessels, with the company responsible for submitting the required data. "Company" refers to the entity that assumes operational duties from the vessel owner, such as a manager or bareboat charterer, as defined in the draft amendments.
  • In the event of a change in the responsible company, vessels must report aggregated emissions data to their Administration or authorized organization, ensuring continuity and compliance, as outlined in the draft amendments to MARPOL Annex VI.

Deadlines and Timelines:

• Formal Adoption: Scheduled for October 2025.
• Detailed implementation guidelines: To be approved in spring 2026.
• Implementation Start: Most measures will take effect in 2027, with full implementation expected by 2028.
• First Parameter Review: Set for 2031, which could become a turning point for scaling up ambition.

ETS & this scheme 

The EU Emissions Trading System (ETS) has been applied to international shipping since January 1, 2024. However, the interaction between the EU ETS and the IMO Net-Zero Framework is still being determined. The European Commission plans to thoroughly assess the IMO's mechanism to ensure regulatory alignment and prevent double taxation. This evaluation will focus on harmonizing efforts and avoiding additional financial burdens on shipping companies subject to both systems. Adjustments to the EU ETS may be considered to align with global standards and support competitiveness within the industry.

Implications for Stakeholders:

• Ship Producers: Encouraged to develop energy-efficient and low-emission vessels to meet demand from ship owners seeking compliance.
• Companies:  Referring to the owner, manager, or bareboat charterer responsible for the ship's operation. They are tasked with meeting GHG Fuel Intensity (GFI) targets and handling the financial impacts of the carbon pricing mechanism, potentially requiring retrofitting of vessels or investment in advanced emission-reducing technologies.
• Countries: Nations with significant shipping industries may implement supportive policies to align with the framework, including financial incentives and infrastructure development for low-emission fuels.

Challenges and Criticisms:

The timeline of the IMO Net-Zero Framework has sparked concerns regarding potential delays in achieving significant emissions reductions by 2030, a critical period for climate action. Additionally, uncertainties persist about how the framework will interact with the EU Emissions Trading System (ETS), raising questions about regulatory alignment and potential overlaps. Stakeholders are awaiting the release of detailed implementation guidelines, expected in spring 2026, to fully understand the operational aspects and implications of the framework. 

If you have any questions or need further clarification on these initiatives, please feel free to reach out to our ESG team in the Netherlands. 

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5. NL Plastic tax update

The initial proposal for a plastic tax, aimed at taxing producers of fossil-based polymers, was scrapped due to economic concerns. In its place, the plastics sector has discussed alternatives (“the plastic table”). One of them is a proposal for a new levy on virgin plastic used in consumer products such as textiles and electronics. This levy is intended to encourage the use of recycled and bio-based materials. The timeline coincides with the EU's rollout of a 'digital product passport', which will provide detailed information on the materials used in products, facilitating better tracking and management of plastic use. Although this proposal is still under consideration, it could have an impact on product pricing and supply chains, particularly affecting industries that rely heavily on plastic components. The Dutch government had also instructed the plastic table to find an alternative for the 567 million euros that the original plastic tax should have yielded annually. But to date that did not work, because the levy that supports the plastic sector would not yield any money for the state treasury. Later this year we expect the reaction from the government on the plastic table outcomes. 

If you have any questions or need further clarification on these initiatives, please feel free to reach out to our ESG team in the Netherlands. 

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6. Webcast: Decoding global tax transparency

Decoding global tax transparency: Public CbyC strategies for MNEs

The global tax transparency landscape is undergoing a significant transformation. The European Union and Australia require large multinational enterprises (MNEs) to publicly disclose key tax and operational data under the public country-by-country (CbyC) reporting rules. Some businesses have already been facing disclosure obligations as early as 2024, covering the previous financial year. These developments are not just about tax compliance – they are reshaping the way MNEs think about transparency, governance, and risk. Meanwhile, the Pillar Two CbyC Safe Harbor requires a high level of accuracy and reliability of the private CbyC data, and in-scope MNEs have been working at establishing robust process to prevent errors or inconsistencies.

These parallel workstreams are converging in ways that will require coordinated, forward-looking strategies. With this in mind, our panel of KPMG specialists invites you to watch this webcast covering the following topics:

•    Back to the basics – what does private CbyC entail and how to get from private CbyC reporting to public CbyC 
•    Frequently asked questions and practical experience on how to comply with the Pillar Two CbyC Safe Harbor 
•    How multinationals approached Romania’s 2024 early adoption of EU public CbyC reporting
•    Strategies on how to prepare a public CbyC report that aligns both with the EU and the Australian public CbyC disclosure requirements
•    The new dimension that public CbyC brings to looking at data and telling your story 

Watch the replay

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7. European Commission publishes tax incentive recommendations

On July 2, 2025, the European Commission issued recommendations on tax incentives to support the Clean Industrial Deal. The recommendations are in line with the recently-published Clean Industrial Deal State Aid Framework (CISAF).

The recommendations set out common guiding principles for Member States to design cost-effective tax measures that stimulate investment in clean technologies and industrial decarbonization. Key instruments suggested for enhancing clean investment include:

• Accelerated depreciation: Member States are recommended to incentivize the acquisition or lease of clean technology equipment through accelerated depreciation, up to full and immediate expensing.
• Tax credits: Member States are recommended to introduce tax credits supporting the creation of additional manufacturing capacity and tax credits supporting investment in energy efficiency and greenhouse gas emission reduction. From a design perspective, the tax credits should primarily be deducted from the corporate tax liability but could also be offset against other national taxes due (where feasible in national tax systems). The tax credits should also be aligned with the design conditions set out by the EU Minimum Tax Directive with respect to Qualified Refundable Tax Credits.

The recommendations further refer to design restrictions established by the CISAF, where the accelerated depreciation or tax credit measures involve State aid (i.e., favor certain undertakings or the production of certain goods) to ensure that the measures are considered compatible with the internal market.

 Please click here to view the full text on kpmg.com and this website for earlier editions.