2022 – THE YEAR THAT LIES AHEAD IN AIR QUALITY
|Beginning of 2022 Carbon Tax period
|NAEIS reporting deadline
|Greenhouse Gas (GHG) reporting deadline
|Subsequent Pollution Prevention Plans deadline (only for a select few)
|Carbon Tax payment deadline for the 2021 tax period
|End of 2022 Carbon Tax period
|Municipal and AEL reporting deadlines. Please ensure that you are aware of the deadlines that are imposed by your municipality and your AEL.
Last year we saw an influx of companies registering for Carbon Tax to ensure that they are legally compliant with this relatively new legislation. Significant changes were made to Carbon Tax in the 2022 Budget Speech that was delivered by our Minister of Finance, Enoch Godongwana.
However, before we look at these changes, it is important to have a fundamental understanding of Carbon Tax. The following article serves as a wonderful starting point or refresher on the Carbon Tax Act.
To delve deeper into the Carbon Tax allowances we have written an article specifically addressing these.
And lastly, should you not yet have registered for Carbon Tax, this article will explain how to register.
The good news is that the government has extended the first phase of South Africa’s Carbon Tax to the 31st December 2025. The first phase provides for generous tax allowances and deductions. The second phase will commence from January 2026, and will be characterized by the “rapid fall away” of the allowances, to use the words of the minister.
The Carbon Tax rate will increase modestly from R 134 /tonne for the 2021 calendar year, to R 144 /tonne for the current 2022 calendar year – but will be increased steeply thereafter. By 2026, the Carbon Tax price will be $ 20 /tonne (R 302 /tonne at the time of writing). By 2030, the Carbon Tax price will be $ 30 /tonne (R 453 /tonne at the time of writing).
The drastic increase in the price of Carbon Tax, and the elimination of allowances, could be described as base broadening which is mentioned elsewhere in the budget speech. Base broadening typically refers to the expansion of the amount of economic activity that is subject to tax. Base broadening is usually achieved through the implementation of new taxes, or by removing allowances pertaining to existing taxes, or by increasing the number of tax payers that are subject to a particular tax. These adjustments to Carbon Tax could be perceived to be part of base broadening.
The advantage of increasing the cost of Carbon Tax and reducing the cost of Corporate Tax (which has been decreased from 28% to 27%) is that behavioural change is encouraged. We as industry are encouraged to adopt greener production techniques in order to pay less tax. This is the behaviour that SARS hope to drive so that South Africa can meet its commitments under COP26. Should you require help, Yellow Tree is here to support you with your 2022 Carbon Tax calculations and submission. Should your tax practitioner perform the calculations for you, we can act as a third party and review these calculations – to give you peace of mind and to ensure that you enjoy the maximum benefit of the allowances.
While Carbon Tax is a midyear deadline, you will note from the table above that the deadline for NAEIS submissions and greenhouse gas (GHG) reporting is only two weeks away, so please contact Francois for a quote if you require assistance with your submissions.
You may also want to contact Francois for stack emissions sampling, fenceline monitoring, leak detection and repair (LDAR) plans and monitoring, atmospheric emissions license (AEL) applications, air dispersion modelling, carbon footprinting, or advice regarding pollution abatement technologies.
As a team of bright Chemical Engineers with a passion for environmental and legal compliance, we are here to help.