Revised Carbon Tax Bill introduced to parliament



Garyn Rapson

The minister of finance recently introduced the revised Carbon Tax Bill to Parliament. The Bill takes into account feedback received during the parliamentary hearings on the December 2017 draft bill which took place earlier this year. The bill aims to give effect to South Africa’s objectives and commitments to reduce greenhouse gas (GHG) emissions under the National Climate Change Response Policy and the Paris Agreement, respectively.

After more than eight years in the making, carbon tax is expected to take effect on 1 June 2019. It will be implemented in a phased approach with the first phase running until 31 December 2022 and the second phase from 2023 to 2030. According to National Treasury, the introduction of the carbon tax in the first phase is not expected to impact the price of electricity.

Entities (including partnerships, trusts, as well as municipal and public entities) involved in any of the activities listed under Schedule 2 of the bill are liable to pay carbon tax on GHG emissions which exceed the prescribed thresholds for those activities. A range of activities in sectors including energy, industrial processing and waste are listed.

The rate of carbon tax on GHG emissions will be imposed at an amount of R120 per tonne carbon dioxide equivalent of the GHG emissions. This rate must, however, be increased each year by the amount of consumer price inflation (CPI) plus 2% until 31 December 2022, and will be adjusted thereafter in line with inflation.

The cill provides for various tax-free “allowances” which enable a reduction in carbon tax liability of up to 95% for certain activities. These allowances provide a large degree of flexibility for taxpayers to reduce their carbon tax liability.

Taxpayers must submit environmental levy accounts and payments as prescribed in terms of the Customs and Excise Act, 1964, on an annual basis for every tax period.

Draft carbon offset regulations govern the carbon offset allowance mechanism provided in terms of the bill. This mechanism enables companies to reduce their carbon tax liability by investing in GHG emission reduction projects.

These regulations are expected to be published in final form on 1 June 2019 to coincide with the commencement of carbon tax. Comments on the Regulations are to be submitted by 14 December 2018.

Contact Garyn Rapson, Webber Wentzel, Tel 011 530-5000, rapson@webberwentzel.com

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