The World Federation of Exchanges has published its response to the UK Government’s consultation on Voluntary Carbon and Nature Markets, backing efforts to raise standards and support market integrity while calling for tax and legal changes it sees as necessary for market development. Central recommendations include zero-rating value added tax on carbon credit transactions and recognising carbon credits as financial instruments to provide greater tax neutrality and investor protections. The response also advocates a “climate-first” approach given the relative maturity of carbon credits compared with nature credits, and urges policymakers to define the legal rights attached to both carbon and nature credits. It calls for a whole-of-government approach to align legal, tax, accounting and prudential frameworks, and for flexibility in applying international standards to accommodate market evolution and innovation. The WFE further proposes requiring all firms in scope of the UK’s Task Force on Climate-related Financial Disclosures framework and prospective Sustainability Disclosure Requirements regimes to publish transition plans, and facilitating participation in Article 6 carbon credit mechanisms under the Paris Agreement to enhance liquidity and scalability.
World Federation of Exchanges 2025-07-09
World Federation of Exchanges calls on UK to zero-rate VAT on carbon credits and recognise them as financial instruments
The World Federation of Exchanges responded to the UK Government’s consultation on Voluntary Carbon and Nature Markets, supporting higher standards and market integrity. It recommends tax and legal changes, including zero-rating VAT on carbon credit transactions and recognizing carbon credits as financial instruments. It advocates a "climate-first" approach, alignment of legal and tax frameworks, and flexibility in international standards, urging firms to publish transition plans and participate in Article 6 carbon credit mechanisms under the Paris Agreement.