LONDON

Major economic and trade regulations affecting carbon pricing, consumer safety, taxation, digital assets, and travel will take effect on Thursday, Jan. 1 in the EU, the US, China, and other jurisdictions, reshaping global commerce and regulatory landscapes.

The EU will implement a border carbon tax on imports of selected products from carbon-intensive industries, affecting sectors such as iron and steel, cement, aluminum, fertilizers, and hydrogen.

The bloc will also adopt a new toy safety regulation aimed at reducing unsafe toys and protecting children from toy-related hazards, endocrine disruptors, harmful respiratory substances, and chemicals toxic to skin and organs.

Under the new standard, substances such as forever chemicals and dangerous bisphenols will be prohibited in toys, as will allergenic fragrances in toys designed for children under the age of three.

Toymakers will be required to conduct safety assessments covering chemical, physical, mechanical, and electrical hazards before products enter the market.

All toys will carry a clearly visible digital product passport to enable traceability and simplify market surveillance and customs controls—companies have until Aug. 1, 2030, to meet the new requirements.

Also in the EU, the bloc will switch to the revised Pan-European-Mediterranean (PEM) rules of origin, marking the end of the transition period during which old and revised rules were applied in parallel.

Origin rules will be harmonized among the EU’s trading partners, updating the cumulation of origin used as proof of origin in trade with countries in the PEM region, while the supply of raw materials and products among these countries will align with the new standards.

The EU’s financial and environmental reporting regime will introduce new obligations and make existing processes permanent. Sustainability reporting requirements will expand to cover a wider range of companies starting Jan. 1.

Large firms with more than 250 employees and meeting certain criteria will be required to publish sustainability reports, and the reporting period will begin for small and medium-sized enterprises traded on EU stock exchanges, with smaller firms offered an option to defer their reporting obligations.

Bulgaria, an EU member since 2007, will adopt the euro as its currency on Jan. 1, raising the number of eurozone members to 21. The last country to join was Croatia when it switched to the euro in 2023.

Crypto users will have to share transaction details with tax authorities

Under the Organization for Economic Cooperation and Development’s Crypto Asset Reporting Framework (CARF), crypto service providers will be required to report user identity data and transaction details to tax authorities.

The UK and the Netherlands are among the countries that will begin implementing the scheme on Jan. 1, while some 48 countries and jurisdictions have already adopted it.

Data collected under CARF will be shared among international tax authorities to boost transparency, fight tax evasion, bring crypto reporting closer to traditional financial sector standards, and ensure users pay applicable taxes.

International money transfers in US to be taxed

Under US President Donald Trump’s “One Big Beautiful Bill” passed in July, several tax measures will take effect next year.

The State and Local Tax (SALT) deduction will shift to a new income-based system. The capped amount, which was $10,000 for many years, will rise to $40,000 for taxpayers with annual incomes below $500,000.

The deduction will gradually decrease for those with incomes above this threshold, offering a significant tax advantage, especially to residents of high-tax states such as New York and California.

International money transfers will be subject to a 1% tax on certain foreign transfers made in cash, by money order, or by check. Transfers made with bank or credit cards, bank accounts, digital wallets, or prepaid cards will not be subject to this tax, which applies to the sender only.

The federal government will apply the Base Erosion and Anti-Abuse Tax (BEAT) rate of 10.5% permanently to prevent large firms from reducing their tax burdens through global payments, while tariffs for upholstered wooden furniture will rise from 25% to 30% and for kitchen and bathroom cabinets from 25% to 50%.

US travel restrictions to expand, energy efficiency incentives to be removed

The US will expand its full travel ban to include Burkina Faso, Mali, Niger, South Sudan, and Syria. Laos and Sierra Leone, previously under limited restrictions, will also be added to the full ban, and holders of travel documents issued by the Palestinian Authority will be barred from entry.

Partial travel restrictions and entry limitations will apply to Angola, Antigua and Barbuda, Benin, Burundi, Cuba, Gabon, Gambia, Ivory Coast, Dominica, Malawi, Mauritania, Nigeria, Senegal, Tanzania, Tonga, Togo, Zambia, and Zimbabwe.

Tax incentives for energy efficiency in homes will end. The up to $3,200 per year deduction for equipment such as heat pumps, windows, doors, insulation, and central air conditioning (AC) systems will be eliminated, as will the up to $5,000 deduction per home for contractors building new energy-efficient homes.

China changes value-added tax, cybersecurity regulations

China’s value-added tax (VAT) regulation, adopted on Dec. 25, 2024, will take effect on Jan. 1, 2026, introducing the place-of-consumption principle in the taxation of cross-border trade and aligning the country’s VAT laws with international norms.

The new law is expected to make VAT collection, the largest item in China’s tax revenues, more efficient.

Amendments to China’s cybersecurity law adopted on Oct. 28 will also come into force, expanding state support for artificial intelligence in cybersecurity and tightening security compliance obligations for network operators and critical information infrastructure operators.

Measures for cross-border personal data transfers announced on Oct. 17 by the Cyberspace Administration of China (CAC) and the State Administration for Market Regulation (SARM) will also go into effect, requiring operators transferring sensitive personal data outside China and those transferring non-sensitive data from more than 100,000 individuals to obtain a cybersecurity certificate under the new framework.