Part Ii
Part II
tax payable;
‘‘carbon budget’’ means an amount of greenhouse gas emissions permitted, against which direct emissions arising from the operations of a person during a defined time period will be accounted for; ‘‘carbon dioxide (CO2) equivalent’’ means the concentration of carbon dioxide that would cause the same amount of radiative forcing (the difference of sunlight absorbed by the Earth and energy radiated back to space) as a given mixture of carbon dioxide and other greenhouse gases; ‘‘carbon tax’’ means a tax on the carbon dioxide (CO2) equivalent of greenhouse gas emissions imposed in terms of section 2; ‘‘combustion’’ means the exothermic reaction of a fuel with oxygen; ‘‘Commissioner’’ means the Commissioner for the South African Revenue Service; ‘‘emission factor’’ means the average emission rate of a given greenhouse gas for a given source, relative to the activity data of a source stream assuming complete oxidation for combustion and complete conversion for all other chemical reactions; ‘‘emissions’’ means—
(a) the release of greenhouse gases or their precursors; or
(b) the release of greenhouse gases and their precursors, into the atmosphere, over a specified area and period of time; ‘‘emissions intensity’’ means an indicator of the result of the measurement of the quantity of greenhouse gas emissions in relation to an activity; ‘‘emissions intensity benchmark’’ means the result of the measurement in respect
(a) expressed as a predetermined value of the quantity of specified greenhouse gas emissions;
(b) in relation to an activity that is differentiated from other activities by means of a product, a type of fuel or a technology; and
(c) compared against the quantity of greenhouse gas emissions, in relation to an identical activity undertaken by another person; ‘‘fugitive emissions’’means emissions that are released into the atmosphere by any other means than through an intentional release through stack or vent including extraction, processing, delivery and burning for energy production of fossil fuels, including leaks from industrial plant and pipelines; ‘‘greenhouse gas’’ means gaseous constituents of the atmosphere, both natural and anthropogenic, that absorb and re-emit infrared radiation, and includes carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6); ‘‘industrial process’’ means a manufacturing process that chemically or physi cally transforms materials; ‘‘IPCC’’ means the Intergovernmental Panel on Climate Change established for the purposes of providing internationally co-ordinated scientific assessments of the magnitude, timing and potential environmental and socio-economic impact of climate change by the United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) and endorsed by the United Nations by General Assembly Resolution 43/53 made at the 70th plenary meeting on 6 December 1988; ‘‘IPCC code’’ means the source code in respect of an activity resulting in the emission of a greenhouse gas as stipulated in the ‘‘Guidelines for National Greenhouse Gas Inventories’’ (2006) issued by the IPCC; ‘‘Minister’’ means the Minister of Finance; ‘‘person’’ includes—
(a) a partnership;
(b) a trust;
(c) a municipal entity as defined in section 1 of the Local Government: Municipal Systems Act, 2000 (Act No. 32 of 2000); and
(d) a public entity listed in Schedules 2, 3A, 3B, 3C and 3D to the Public Finance Management Act, 1999 (Act No. 1 of 1999); ‘‘taxpayer’’ means a person liable for the carbon tax in terms of section 3; and ‘‘tax period’’ means a period in respect of which tax is payable as prescribed under section 16. Imposition of carbon tax 2. There must be levied and collected for the benefit of the National Revenue Fund, a tax to be known as the carbon tax. Persons subject to tax 3. A person is— (a) a taxpayer for the purposes of this Act; and (b) liable to pay an amount of carbon tax calculated as contemplated in section 6 in respect of a tax period as specified in section 16, if that person conducts an activity in the Republic resulting in greenhouse gas emissions above the threshold determined by matching the activity listed in the column ‘‘Activity/ Sector’’ in Schedule 2 with the number in the corresponding line of the column ‘‘Threshold’’ of that table. Tax base 4. (1) The carbon tax must be levied in respect of the sum of the greenhouse gas emissions of a taxpayer in respect of a tax period expressed as the carbon dioxide equivalent of those greenhouse gas emissions resulting from fuel combustion and industrial processes, and fugitive emissions in accordance with the emissions factors determined in accordance with a reporting methodology approved by the Department of Environmental Affairs. (2) If a reporting methodology approved by the Department of Environmental Affairs for the purposes of determining emission factors does not exist in respect of the calculation of greenhouse gas emissions resulting from fuel combustion, and industrial processes, and fugitive emissions the carbon tax must be levied in respect of the sum of the greenhouse gas emissions of a taxpayer in respect of a tax period expressed as the carbon dioxide equivalent of those greenhouse gas emissions resulting from— (a) fuel combustion in respect of that tax period that is a number constituted by the sum of the respective numbers determined for each type of fuel in respect of which a greenhouse gas is emitted in respect of that tax period which E = (A x B) respective numbers must be determined in accordance with the formula: in which formula— (i) ‘‘E’’ represents the number to be determined; (ii) ‘‘A’’ represents the mass of any one type of the fuel expressed in tonne that is the source of the greenhouse gas emission, other than any fuel utilised for the purposes of international aviation and maritime transport; (iii) ‘‘B’’ represents the greenhouse gas emission factor in carbon dioxide equivalent per tonne that must be determined in accordance with the X = {(C x 1) + (M x 23) + (N x 296)} x D formula: (aa) ‘‘X’’ represents the number to be determined; (bb) ‘‘C’’ represents the carbon dioxide emissions of a fuel type determined by matching the fuel type listed in the column ‘‘fuel type’’ in Table 1 of Schedule 1 with the number in the corresponding line of the column ‘‘CO2 (KGCO2/TJ)’’ of that table; (cc) ‘‘M’’ represents the methane emissions of a fuel type determined by matching the fuel type listed in the column ‘‘fuel type’’ in Table 1 of Schedule 1 with the number in the corresponding line of the column ‘‘CH4 (KGCH4/TJ)’’ of that table’; (dd) ‘‘N’’ represents the Nitrous Oxide emissions of a fuel type determined by matching the fuel type listed in the column ‘‘fuel type’’ in Table 1 of Schedule 1 with the number in the corresponding line of the column ‘‘N2O (KGN2O/TJ)’’ of that table; and (ee) ‘‘D’’ represents the default calorific value (terajoule per tonne) of a fuel type determined by matching the fuel type listed in the column ‘‘fuel type’’in Table 1 of Schedule 1 with the number in the corresponding line of the column ‘‘DEFAULT CALORIFIC VALUE (TJ/TONNE)’’ of that table; (b) fugitive emissions that is a number constituted by the sum of the respective numbers determined for each type of commodity, fuel or technology in respect of which the greenhouse gas is emitted in respect of a tax period which F= (N x Q) respective numbers must be determined in accordance with the formula: in which formula— (i) ‘‘F’’ represents the number to be determined; (ii) ‘‘N’’ represents the mass expressed in tonne in the case of solid fuels or the volume of each type of fuel expressed in cubic metres in the case of fuels other than solid fuels, in respect of the greenhouse gas emission; and (iii) ‘‘Q’’ represents the greenhouse gas emission factor in carbon dioxide equivalent per tonne or cubic metres that must be determined in X = (C x 1) + (M x 23) + (N x 296) accordance with the formula: (aa) ‘‘X’’ represents the number to be determined; (bb) ‘‘C’’ represents the carbon dioxide emissions of a fuel type determined by matching the fuel type listed in the column ‘‘fuel type’’ in Table 2 of Schedule 1 with the number in the corresponding line of the column ‘‘CO2’’ of that table; (cc) ‘‘M’’ represents the methane emissions of a fuel type determined by matching the fuel type listed in the column ‘‘fuel type’’ in Table 2 of Schedule 1 with the number in the corresponding line of the column ‘‘CH4’’ of that table; (dd) ‘‘N’’ represents the Nitrous Oxide emissions of a fuel type determined by matching the fuel type listed in the column ‘‘fuel type’’ in Table 2 of Schedule 1 with the number in the corresponding line of the column ‘‘N2O’’ of that table; and (c) industrial process in respect of a tax period that is a number constituted by the sum of the respective numbers determined for each type of commodity, fuel or technology in respect of which the greenhouse gas is emitted in respect of that tax period which respective numbers must be determined in accordance with P= (G x H) the formula: in which formula— (i) ‘‘P’’ represents the amount to be determined that must not be less than zero; (ii) ‘‘G’’ represents the mass of each raw material used or product produced expressed in tonne in respect of which the greenhouse gas is emitted in respect of that tax period; and (iii) ‘‘H’’ represents the greenhouse gas emission factor in carbon dioxide emissions equivalent per tonne for each raw material used or product X = (C x 1) + (M x 23) + (N x 296) + (H x 11 900) + (T x 5 700) + (S x 22 200) produced that must be determined in accordance with the formula: (aa) ‘‘X’’ represents the number to be determined; (bb) ‘‘C’’ represents the carbon dioxide emissions of a raw material or product determined by matching the fuel type listed in the column ‘‘SOURCE CATEGORY ACTIVITY / RAW MATERIAL / PROD UCT’’ in Table 3 of Schedule 1 with the number in the corresponding line of the column ‘‘CO2/tonne product’’ of that table; (cc) ‘‘M’’ represents the methane emissions of a raw material or product determined by matching the fuel type listed in the column ‘‘SOURCE CATEGORY ACTIVITY / RAW MATERIAL / PRODUCT’’ in Table 3 of Schedule 1 with the number in the corresponding line of the column ‘‘CH4/tonne product’’ of that table; (dd) ‘‘N’’ represents the Nitrous Oxide emissions of a raw material or product determined by matching the fuel type listed in the column ‘‘SOURCE CATEGORY ACTIVITY / RAW MATERIAL / PRODUCT’’ in Table 3 of Schedule 1 with the number in the corresponding line of the column ‘‘N2O/ tonne product’’ of that table; (ee) ‘‘H’’ represents the Hexafluoroethane (C2F6) emissions of a raw material or product determined by matching the fuel type listed in the column ‘‘SOURCE CATEGORY ACTIVITY / RAW MATERIAL / PRODUCT’’ in Table 3 of Schedule 1 with the number in the corresponding line of the column ‘‘C2F6/tonne product’’ of that table; (ff) ‘‘T’’ represents the carbon tetrafluoride (CF4) emissions of a raw material or product determined by matching the fuel type listed in the column ‘‘SOURCE CATEGORY ACTIVITY / RAW MATERIAL / PRODUCT’’ in Table 3 of Schedule 1 with the number in the corresponding line of the column ‘‘CF4/tonne product’’ of that table; and (gg) ‘‘S’’ represents the Sulphur hexafluoride (SF6) emissions of a raw material or product determined by matching the fuel type listed in the column ‘‘SOURCE CATEGORY ACTIVITY / RAW MATERIAL / PRODUCT’’ in Table 3 of Schedule 1 with the number in the corresponding line of the column ‘‘SF6/tonne product’’ of that table. Rate of tax 5. (1) The rate of the carbon tax on greenhouse gas emissions must, subject to subsections (2) and (3), be imposed at an amount of R120 per ton carbon dioxide equivalent of the greenhouse gas emissions of a taxpayer. (2) The rate of tax specified in subsection (1) must be increased by the amount of the consumer price inflation plus two per cent for the preceding tax period as determined by Statistics South Africa per year until 31 December 2022. (3) The rate of tax must be increased after 31 December 2022 by the amount of the consumer price inflation for the preceding tax year as determined by Statistics South Africa. Calculation of amount of tax payable 6. (1) Subject to subsection (2), the amount of tax payable by a taxpayer in respect of X = <{[(E - S) x (1 - C)]-[D x (1-M)]} + {P x (1 - J)} + {F x (1 - K)}> x R a tax period must be calculated in accordance with the formula: in which formula— (a) ‘‘X’’ represents the amount to be determined that must not be less than zero; (b) ‘‘E’’ represents the number in respect of the total fuel combustion related greenhouse gas emissions of the taxpayer in respect of that tax period expressed as a carbon dioxide equivalent determined in terms of section 4(1) or (2)(a); (c) ‘‘S’’ represents the number in respect of greenhouse gas emissions, expressed in terms of carbon dioxide equivalent that were sequestrated in respect of that tax period as verified and certified by the Department of Environmental Affairs (d) ‘‘C’’ represents a number equal to the sum of the percentages of allowances determined under sections 7, 10, 11, 12, and 13 in respect of that tax period, subject to section 14; (e) ‘‘D’’ represents the number in respect of the petrol and diesel related greenhouse gas emissions of that taxpayer in respect of that tax period expressed as a carbon dioxide equivalent, determined in terms of section 4(1) or (2)(a); (f) ‘‘M’’ represents a number equal to the sum of the percentages of the allowances determined under sections 7, 12 and 13 in respect of that tax period, subject to section 14; (g) ‘‘P’’ represents the number in respect of the total industrial process related greenhouse gas emissions of the taxpayer in respect of that tax period expressed as a carbon dioxide equivalent determined in terms of section 4(1) or (2)(c); (h) ‘‘J’’ represents a number equal to the sum of the percentages of the allowances determined under sections 8, 10, 11, 12 and 13 in respect of that tax period, subject to section 14; (i) ‘‘F’’ represents the number in respect of the total fugitive greenhouse gas emissions of the taxpayer in respect of that tax period expressed as a carbon dioxide equivalent determined in terms of section 4(1) or (2)(b); (j) ‘‘K’’ represents the sum of the percentages of the allowances determined in terms of sections 7, 9, 10, 11, 12 and 13 in respect of that tax period, subject to section 14; and (k) ‘‘R’’ represents the rate of tax prescribed under section 5: Provided that where the number in respect of the determination of the expression ‘‘(E-S)’’ in the formula is less than zero, that number must be deemed to be zero. (2) The amount of tax payable by a taxpayer in respect of the generation of electricity from fossil fuels in respect of a tax period must be calculated in accordance with the X=A-B-C formula: in which formula— (a) ‘‘X’’ represents the amount to be determined that must not be less than zero; (b) ‘‘A’’ represents the amount of tax payable in respect of a tax period determined in terms of subsection (1); (c) ‘‘B’’ represents the renewable energy premium in respect of a tax period, from the commencement of the tax period until 31 December 2022, constituted by an amount expressed in Rand determined by the Minister by notice in the Gazette; and (d) ‘‘C’’ represents an amount equal to the environmental levy contemplated in respect of electricity generated in the Republic in Section B of Part 3 of Schedule 1 to the Customs and Excise Act, 1964 (Act No. 91 of 1964), paid in respect of a tax year, until 31 December 2022. (3) atmosphere.
Legal Area
Carbon tax or levy provisions
Cross-cutting Categories
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