This section sets out who is liable to pay carbon tax.

Compliance Obligations?

Companies which exceed the stipulated thresholds and conduct certain activities will be liable to pay Carbon Tax. Liability for the tax arises for every entity that conducts an activity above the threshold which is listed in Schedule 2 of the Act. Please note that the Carbon Tax applies at “taxpayer” level and is for entities at the highest level. As such these thresholds apply at this entity level and not at site or facility level.

The three main thresholds provided in Schedule 2 are:
• 10MW(th) –this refers to a combined capacity (Fuel Combustion Activities) equal to or above 10MW(th) net heat input for the whole entity
• None – data provides that fall within this category as stipulated in Schedule 2 must report and are liable for Carbon Tax regardless of the quantity of GHG emissions or size of the operational activity. Therefore, these data providers will always have to report on their GHG emissions.
• NA (Not Applicable) – data providers that fall within this category are not required to report on their GHG emissions associated with the listed activity in Schedule 2.
Other thresholds for specific activities include for example 100 000litres/year, 4 million bricks a month, 100 Hectares of Plantations and 1000 cubic metres per day (for Industrial Wastewater Treatment and Discharge).

This section deals with calculations of emissions.

Compliance Obligations?

The tax is based on calculated emissions using approved methods stipulated in the National Greenhouse Gas Emission Reporting Regulations (NGERs) and the associated technical guidelines developed by the Department of Environmental Affairs (DEA).

The Carbon Tax for a tax period is levied according to the sum of the GHG emissions expressed as the carbon dioxide equivalent of those GHG emissions resulting from fuel combustion and industrial processes and fugitive emissions in accordance with an emissions determination methodology approved by the Department of Environmental Affairs.

The two methodologies are as follows:
• Employing readily available statistical data on the intensity of processes (activity data) and emission factors as specified in the IPCC Guidelines For National Greenhouse Gas Inventories (2006) or;
• Employing the statistical data and emission factors as specified in paragraph (a) including country-specific emission factors.
The carbon tax will be levied in respect of the sum of the GHG emissions expressed as carbon dioxide equivalents of those GHG emissions.

This section deals with the rate of tax.

Compliance Obligations?

Companies which exceed the stipulated thresholds for certain activities will be penalised R190 per tonne of carbon dioxide equivalent (CO2e) from 01 January 2024. The rate of tax must be increased by the amount of the consumer price inflation plus two per cent for the preceding tax period as determined by Statistics South Africa per year.

This section details how to calculate of amount of tax payable.

Compliance Obligations?

Calculation of amount of tax payable is fairly complex and must be calculated in accordance with the formula X = {[(E - S) x (1 - C)]-[D x (1-M)]} + {P x (1 - J)} + {F x (1 - K)} x R as per section 6 of the Act. In simple terms it is essentially the emissions less allowances multiplied by the rate of tax.

This part sets out the allowances that may be applied to reduce the rate of tax.
This part contains
Section 7. Basic tax free allowances
Section 8. Allowance for industrial process emissions
Section 9. Allowance in respect of fugitive emissions
Section 10. Trade exposure allowance
Section 11. Performance allowance
Section 12. Carbon budget allowance
Section 13. Offset allowance

These “allowances” or allowable tax breaks will reduce the effective rate to between R6 and R48 per tonne of CO2.

Compliance Obligations?

Based on extensive stakeholder engagements and in order to ensure a smooth transition to a low carbon economy, a number of transitional tax-free allowances are provided which include:
• A basic tax-free allowance ranging from 60 to 75 per cent;
• A variable tax-free allowance for trade-exposed sectors (up to a maximum of 10 per cent);
• A maximum tax-free allowance of 5 per cent for above average performance;
• A 5 per cent tax-free allowance for companies with a Carbon Budget;
• A carbon offset allowance of maximum of either 5 to 10 per cent.

These “allowances” or allowable tax breaks will reduce the effective rate to between R6 and R48 per tonne of CO2.

This section deals with the administration of the carbon tax.

Compliance Obligations?

The Carbon Tax Act will be administered as if the carbon tax were an environmental levy as contemplated in section 54A of the Customs and Excise Act, 1964 (Act No. 91 of 1964), that must be collected and paid in terms of the provisions of that Act.
All administrative actions, requirements and procedures for purposes of submission and verification of accounts, collection and payment of the carbon tax as an environmental levy, to the extent not regulated in this Act, regulated by the Customs and Excise Act, 1964.
If liable to pay carbon tax, you must ensure you register and pay carbon tax as prescribed in the Customs and Excise Act, 1964 by submitting yearly environmental levy accounts and payments as prescribed by rule in terms of the Customs and Excise Act, 1964 (Act No. 91 of 1964), for every tax period.

This section deals with tax period.

Compliance Obligations?

The initial tax period is a 6-month period, commencing on 1 June 2019 and ending on 31 December 2019. Following the initial tax period, the tax period will be 1 January of each year and ending on 31 December. You must pay carbon tax for every carbon tax period.