Share with your friends

South Africa: Carbon tax update; expected effective date June 2019

South Africa: Carbon tax update

A carbon tax bill was adopted last week by the Standing Committee on Finance, and is currently under consideration by the National Assembly. The Minister of Finance has indicated that a carbon tax would be effective beginning 1 June 2019. However, the first tax period for the carbon tax has yet to be determined, and only emissions from that date would be subject to the carbon tax. More clarity is expected in next week’s budget speech.


Related content

The carbon tax has been designed with a phased-in approach and to allow many tax-free allowances. In addition, it is expected that there would be a range of tax incentives and revenue recycling measures to minimise the initial impact of the carbon tax such as possibly extending the period of the current energy efficiency savings tax incentive beyond 1 January 2020. The impact of the carbon tax would also be reviewed at least three years after implementation.

The initial carbon tax rate would be R120 per tonne of carbon dioxide equivalent (CO2e) of greenhouse gas emissions above the tax-free threshold of a taxpayer. Taking into account the various tax-free allowances, this could translate into an initial effective carbon tax rate range as low as R6 to R48 per tonne of CO2e. The bill also specifies that this rate would have to be increased by a consumer price inflation (CPI) percentage of +2% per year until 31 December 2022, after which the rate of tax would be increased only by CPI.

The carbon tax would be calculated based on industry sector activity classifications (contained in a schedule to the bill). An extensive listing of activities is covered—including waste, industrial processing, and agriculture. Taxpayers would need to determine whether their emissions (from fuel combustion, industrial processes, and fugitive emissions) fall below the prescribed thresholds, and whether or not they would be liable for carbon tax. Taxpayers subject to the carbon tax would be required to submit environmental levy accounts and payments as prescribed in terms of Customs and Excise Act No. 91 of 1964 on an annual basis for every tax period.

Read a February 2019 report [PDF 82 KB] prepared by the KPMG member firm in South Africa

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal