During the annual budget speech, the Minister of Finance announced that draft carbon tax legislation will be published in 2015 for public consultation in the hope that it will become law in 2016. The carbon tax will apply to all direct greenhouse gas emissions that are released from sources owned or controlled by the specific entity.
The tax will be imposed at a rate of R120 per tonne of carbon dioxide equivalent and increase by 10% per annum. For liquid or transport fuels and other non-stationary greenhouse emissions, the carbon tax will be incorporated into the current fuel tax regime. Entities that are liable to pay carbon tax may reduce their liabilities by buying carbon credits from entities that are not liable for carbon tax, provided that certain requirements are met.
Companies from all sectors will need to come to terms with the broader implications of the carbon tax because even if an entity itself is not liable for carbon tax, it will be indirectly affected by other entities in the supply chain that are liable to pay the carbon tax.