In the 2022 National Budget Speech, the Minister of Finance, Enoch Godongwana, announced that Phase 1 of the Carbon Tax will be extended until 31 December 2025 with Phase 2 only being implemented on 1 January 2026. This means that the transitional support measures afforded to companies in the first phase, such as significant tax-free allowances, scope 1 emissions-only reporting and revenue-recycling measures, will continue.
Industries that are currently impacted by phase 1 requirements include heavy metals, mining, manufacturing and other industries that have direct greenhouse (GHG) emissions that occur from sources that are controlled or owned by an organisation (e.g., emissions associated with fuel combustion in boilers, furnaces, vehicles). These are referred to as scope 1 emissions.
As a result of delaying the second phase, some sectors will remain beyond the reach of the carbon tax for now. These include agriculture, forestry and other land use and waste sectors, as well as Eskom, the state-owned power utility.
Carbon Tax Rate Increased
The Carbon Tax rate was increased by R10 from R134 to R144 ($9) per tonne in the Budget Speech with effect from 1 January 2022. The rate will continue to increase annually by inflation. The annual increase during Phase 2 will increase with greater increments to reach $30 by 2030. To prepare South Africa for the structural transition to a climate-resilient economy, government proposes to progressively increase the carbon price every year by at least $1 to reach $20/t of CO2e by 2026.
Carbon Budgets
Carbon budgeting is a process of allocating a greenhouse gas emissions allowance to a company for a specific period of time. Emitters that have participated in the voluntary carbon budget system are entitled to an additional 5% tax free allowance. Once carbon budgets become mandatory, this allowance will fall away.
The Climate Change Bill will make it compulsory for taxpayers to participate in the carbon budget system.
Vehicles Emissions Tax
Government also proposes to increase the vehicle emissions tax rate on passenger cars from R120/g to R132/g of carbon dioxide emissions per kilometre and increase the tax on double cabs from R160/g to R176/g of carbon dioxide emissions per kilometre from A and to B.
Interactive Carbon Tax Reporting Tool
To help ease your carbon tax worries we have designed a tool to assist businesses with your carbon tax submissions to SARS.
The Green Building Design Group carbon intelligence team has designed an interactive Carbon Tax Assessment Tool for businesses to do a basic calculation of your carbon footprint based on energy consumption and your GHG data. It also enables you to determine if you qualify for 12L energy efficiency or 12B renewable energy tax incentives as part of the Income Tax series. The Carbon Tax Assessment Tool reports on Scope 1 and Scope 2 emissions. It analyses the carbon footprint against the currently indicated regulatory framework with respect to the following GHG economic activities.
These activities generally include:
- Stationary fuel combustion installations (≥ 10 MW).
- Fugitive emissions associated with coal mining and oil and gas operations.
- Waste disposal and treatment, including wastewater.
- Industrial process emissions.
- Mineral production and processing activities.
- Chemical production activities.
- Pulp and paper production activities.
- Glass production activities.
- Metallurgical industrial activities.
An emitter is liable for a fine up to R10 million or imprisonment up to ten years if they do not comply with the mandatory Carbon Tax reporting regulations.
Green Building Design Group Communications Team
February 2022
In the 2022 National Budget Speech, the Minister of Finance, Enoch Godongwana, announced that Phase 1 will be extended until 31 December 2025 with Phase 2 only being implemented on 1 January 2026.
The Carbon Tax rate was increased by R10 from R134 to R144 per tonne in the Budget Speech with effect from 1 January 2022. The rate will continue to increase annually by inflation. The annual increase during Phase 2 will increase with greater increments to reach $30 by 2030. To prepare Southfor the structural transition to a climate-resilient economy, government proposes to progressively increase the carbon price every year by at least $1 to reach $20/t of CO2e by 2026.
Green Building Design Group has designed a free Carbon Tax Assessment Tool to help businesses report on their emissions. The Carbon Tax Assessment Tool reports on Scope 1 and Scope 2 emissions. It analyses the carbon footprint against the currently indicated regulatory framework with respect to the following GHG economic activities.