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COVID-19: Proposed deferral of payment of carbon tax, South Africa

11 May 2020
– 3 Minute Read


It has been almost a year since the Carbon Tax Act 15 of 2019 (Carbon Tax Act) came into effect. The Carbon Tax Act is designed to give effect to the polluter pays principle and assist South Africa in reducing its greenhouse gas emissions. To this end, the Customs and Excise Act 91 of 1964 (Customs and Excise Act) provides for the implementation and administration of the carbon tax as an environmental levy.

Following the declaration of a national state of disaster on 15 March 2020 as a result of the COVID-19 outbreak, and the substantial financial pressure placed on the South African economy as a result thereof, President Cyril Ramaphosa, on 21 April 2020, inter alia announced that there would be various tax relief measures implemented in order to provide short-term financial relief to the economy.

One of the support measures that was announced is the proposed delay for the filing and first payment of carbon tax, which was, in terms of section 54FD.04 of the Rules published under the Customs and Excise Act 91 of 1964 (Customs Rules), required to be completed by 31 July 2020.

Draft amendments to the Customs Rules were published on 1 May 2020 for comment. The draft amendments provide for the relevant documents for filing (including the consolidated annual account on form DA180) and the payment of the carbon tax must be made between 1 October 2020 and not later than the penultimate working day of that month (i.e. 29 October 2020). If the proposed amendments are passed as they are, it should be noted that payment and filing of the relevant documents will still be required to be completed in July for every year thereafter.

In terms of the Greenhouse Reporting Regulations published under the National Environmental Management: Air Quality Act 34 of 2004 (GHG Regulations), the National Inventory Unit within the Department of Environmental Affairs, Forestry and Fisheries (DEFF) has 60 days from the date of submission to assess the data submitted by the data provider. However, DEFF may, where it reasonably believes that the information may not be transparent, complete or correct, or require a data provider to verify and validate the information within 60 days. This would not provide sufficient time to prepare for the filing and payment of the carbon tax.

Considering the recent Ministerial Direction extending the period for greenhouse gas reporting from 31 March 2020 to 30 April 2020, the draft amendments provide the DEFF with time to assess the information submitted and provide the data provider with sufficient time to verify and validate the information if required to do so, while still having a reasonable period in order to prepare for the submission and payment of the carbon tax. However, if the carbon tax is to be paid in July, the misalignment between the GHG Regulations and the Customs and Excise Rules, remains.

In the Explanatory Memorandum, one of the reasons cited for the deferral in payment of carbon tax is that ‘There were further concerns that due to the lockdown companies will not be able to timeously license with SARS, file their carbon tax returns, make payments and access the carbon offset allowance administered by the Department of Mineral Resources and Energy.’

Comments on the draft amendments to the Customs Rules close on 15 May 2020 unless extended.