Meaning
Calculation accounts for the material lost during the manufacturing or recycling process when determining the final weight of plastic. Yield loss deduction reflects scrap and process waste generated during production. It ensures that the manufacturer only pays tax on the material that ends up in the final product.
The deduction cannot be applied to material that is sold as a secondary product rather than being discarded.
Process Waste
Every moulding or extrusion process involves some loss of material due to trimming and startup waste. Yield loss deduction allows companies to adjust their inventory records to match the physical reality of their production output.
Content Calculation
When calculating the recycled fraction, the losses must be applied correctly to both the virgin and recycled portions. Yield loss deduction prevents the overestimation of recycled content which could lead to non-compliance with tax laws. The method for calculating this loss must be consistent and transparent across all reporting periods.
Moulders often use average loss rates derived from historic data.
Economic Monitoring
Monitoring these losses helps a moulder identify areas where they can improve their process to reduce waste. Yield loss deduction is a standard part of material requirements planning and cost accounting in the plastics industry.
