South Africa Will Impose Carbon Tax

February 28, 2012 Taxation in South Africa

Carbon tax to be instated in South AfricaPRETORIA – South Africa will soon impose a new carbon tax, although the measure will only apply to less than 40 percent of all carbon dioxide released into the atmosphere.

The government of South Africa recently released its latest budget plan, which, amongst other measures, unveiled a proposal to instate a new carbon tax which would be levied on polluters from all sectors of the economy.

The new tax will be implemented in the 2013 – 2014 fiscal year, and will be charged at ZAR 160 for each ton of carbon dioxide released into the atmosphere, and the levy will increase by 10 percent each year until 2020.

In order to minimize the adverse economic effects of the proposed tax, a maximum of only 40 percent of an enterprise’s total emissions will be subject to the new system. The emissions threshold is a temporary measure and will remain in place until 2020. Companies that are not operating in the power production industry may also apply to lower their limit.

The Treasury Department of South Africa is expected to publish draft legislation of the new carbon tax within a few months. Prior to the new tax being enacted it would still need to be approved by the parliament of South Africa.

According to the government of South Africa, the new tax will provide enterprises with greater incentive to utilize green technologies and clean energy. The move is also expected to result in a gradual decrease in the country’s reliance on coal based energy production.