With the imminent introduction of Carbon Tax, it is important to know how this will affect your business. While your business may not be directly affected by the tax, your suppliers may well have to pass on additional costs incurred as a result of it. So, let’s explore who and what will be subject to the tax.

Persons subject to tax

Liability for the tax arises for every entity that conducts an activity and emits GHG emissions above the threshold for the following activities:

1. the Energy Sector (such as fuel combustion activities, petroleum refining, civil aviation, pipelines etc.).
2. the Industrial Processes and Product Use Sector (such as cement production, lime production, Nitric acid production, ceramics, Refrigeration and Stationery Air Conditioning).
3. the Agriculture, Forestry and other Land Use Sector (such as cattle, forest land, harvested food products).
4. the Waste Sector (such as managed waste disposal sites, waste water treatment and discharge).

The sectors listed in 3 and 4 above will be exempt during the first implementation phase (up to 2022), due to measurement difficulties.

Greenhouse gases covered

The Carbon Tax covers greenhouse gas emissions including carbon dioxide, methane, nitrous oxide, perfluorocarbons, hydrofluorocarbons and sulphur hexafluoride.

Tax base

The tax base comprises the sum of the greenhouse gas emissions of a taxpayer in respect of a tax period – expressed as the carbon dioxide equivalent (CO2-eq) of those greenhouse gas emissions resulting from fossil fuel combustion, emissions from industrial process and product use and fugitive emissions – all of which are determined in accordance with the emissions factors determined in accordance with a reporting methodology approved by the Department of Environmental Affairs.

What is fairly certain is items such as the fuel price will be affected. It is anticipated that the tax will add an additional 9 cents per litre to the petrol price and 10 cents to the diesel price.

So be aware of the sectors affected and assess how this could impact your pricing from suppliers.