South Africa: Taxation of greenhouse gas emissions | KPMG | GLOBAL

South Africa: Proposal for direct taxation of greenhouse gas emissions

South Africa: Taxation of greenhouse gas emissions

A draft “carbon tax bill” aims to incentivise both producers and consumers towards low carbon green investments and technology in order to reduce greenhouse gas (GHG) emissions by taxing GHG emissions directly. In response to the draft bill, the “Davis tax committee” released its first interim report on carbon tax on 13 November 2015.


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The proposed carbon tax covers GHG emissions from stationary sources that are owned or controlled by the taxpayer. These emissions are attributable to fuel combustion and gasification as well as non-energy industrial processes such as synthetic fuels production, coal mining, iron and steel, ferro-alloy production, aluminum and cement production. The emissions include carbon dioxide (CO2) as well as other GHGs. 

GHGs would be measured and described in terms of a common unit, the “carbon dioxide equivalent” that represents the amount of CO2 that would have the equivalent global warming impact as the GHG in question. Emissions from non-stationary sources (e.g., motor vehicles) would be taxed through the fuel tax regime. 

The carbon tax would be levied from 1 January 2017 on GHG emissions from fossil fuel combustion, fugitive emissions in respect of commodities, fuel or technology and industrial processes and product use. The tax would be levied for a 12-month tax period with payments due on a six-month basis. During the initial phase, the tax would be levied on all sectors and activities other than agriculture, forestry and other land use and the waste sector. 



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