Lets Unpack the Carbon Tax Act   

Why was it implemented? 

South Africa is the 15th largest pollution emitter in the world! This is contributing hugely to climate change which is affecting many South Africans, particularly the poor and those in the agricultural sector. It is clear that we need to change this figure and putting a price on carbon is one way to do this.  

What is the Carbon Tax? 

Carbon tax will be levied on the sum of greenhouse gas emissions from fuel combustion, industrial processes, and fugitive emissions which are above the threshold for that activity.  Who will the Tax be paid to? Companies liable for the Tax will submit a report to the Department of Environmental Affairs and pay the tax to SARS.

  When is it due?

The first submission is due on 31st December 2019 and will be payable by 31 March 2019. Thereafter, the tax period will be January-December with payment having to be made 2-3 months after period end. 

 What is the tax rate?

 The nominal rate is R120 per tonne of carbon dioxide equivalent. However, with the numerous tax-free allowances, the rate could reduce to R6-R48 per tonne.

 Why should your company start planning for a low-carbon future? 

The period 2019-2022 is the introductory period for the Tax and the regulations are relatively lenient. However, this will probably change in 2022 with the COe rates being higher and more companies being liable.

Lower-carbon options will be become more competitive, because they are subject to less tax and therefore priced lower.  Many companies paying the tax will add it to the cost of their products. Customers will then choose cheaper, lower-carbon goods and services.In business, 95% of the value of the business is vested in its brand. Eco-conscious customers will support the company with the strongest ‘green’ brand.