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South Africa Consults On Carbon Offsets

by Lorys Charalambous, Tax-News.com, Cyprus

22 June 2016


On June 20, South Africa's National Treasury published draft regulations for public comment on the terms of the carbon offset to be included in the country's proposed carbon tax.

Draft carbon tax legislation was published in November 2015. The Government decided last year that the carbon tax should be postponed by a year, into 2016, to allow for further consultation, which has been ongoing since 2010.

It has been proposed that certain tax-free thresholds and allowances will be granted in order to reduce effective tax rates over the first phase of the carbon tax. In that respect, the draft Carbon Tax Bill makes provision for a carbon offset allowance that will enable firms to cost-effectively lower their carbon tax liability by between five and 10 percent of their actual emissions, and will incentivize investment in greenhouse gas (GHG) emission-mitigation projects.

In the latter respect, the National Treasury has pointed out that carbon offsets involve specific projects or activities in South Africa outside of a taxable entity's normal activities that are subject to carbon tax (to prevent double counting), and that result in quantifiable and verifiable GHG emission reductions. Examples would include, but are not limited to, investments in public transport, waste, and agriculture, forestry, and other land use sector activities.

Written comments on the draft regulations should be submitted to the National Treasury by close of business on July 29, 2016.

TAGS: South Africa | compliance | tax | investment | business | law | legislation | carbon tax | tax breaks | regulation | business investment | Africa | Tax

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