On 04 December, the South African Revenue Service (Sars) published draft regulations on Trade Exposure Allowance, and on Greenhouse Gas (GHG) Emissions Intensity Benchmarks, in terms of the Carbon Tax Act, 2019, on which comment is due by 17 January 2020.
According to Sars’ explanatory note, the Trade Exposure Allowance draft regulations give effect to the sector-based allowance and provide a list of sectors and subsectors and their respective trade exposure allowances. The regulations also outline an alternative approach to calculate the trade exposure allowance for companies. In addition, they aim to assist companies that potentially face competitiveness pressures whilst the performance allowance seeks to encourage firms to reduce the carbon intensity of their production processes relative to their peers and promote the competitiveness of local products.
On 02 December National Treasury said it would ensure that the final regulations would be published in the Government Gazette for the first quarter of 2020, to align the regulations with the Greenhouse Emissions reporting period of the Department of Environment, Forestry and Fisheries.
According to National Treasury, the Carbon Tax is an integral part of Government’s package of policy measures to mitigate climate change as outlined in the National Climate Change Response Policy, National Development Plan and its Nationally Determined Contribution commitments under the 2015 Paris Agreement.
National Treasury intends to introduce the Carbon Tax in a phased manner at a relatively low rate initially. This phased introduction will allow businesses time to make the necessary structural adjustments to their production processes and practices and to ensure a just transition to a low carbon, climate resilient economy.
Story by: Riaan de Lange