After almost a decade in the works, South Africa’s carbon tax was finally signed into law in 2019. In a bid to mitigate the impacts of climate change, government now taxes greenhouse gas emissions. This tax applies to anyone with emissions, including municipalities.

In Part 1 of the series, we introduced you to the Carbon Tax Act. We gave a basic introduction to greenhouse gases and how the Carbon Tax works. We ended off with an explanation as to how the revenue service measures the amount of emissions produced by your plant. 

In Part 2, we give an overview of how the carbon tax is calculated. We then move on to explaining how you can reduce the carbon footprint of your plant.

How is the Carbon Tax Liability Calculated?

A factory’s total greenhouse gas emission is obtained by multiplying both the quantity of each greenhouse gas produced (kg/year) and the global warming potential figure. These six numbers, for each greenhouse gas, are then summed and referred to as the carbon dioxide equivalent emission.

Initially, the carbon tax rate was implemented at R120 per ton of carbon dioxide equivalent emissions.  The rate will increase annually by inflation plus a further 2% until 2022, and thereafter annually by inflation.

SARS has also allowed specific industries to have a nett carbon tax rate ranging from R6 to R48 per ton of carbon dioxide equivalent emissions. This is implemented to provide current emitters time to transition their operation to cleaner technologies through investments in energy efficiency, renewables, and other low-carbon measures.

Taxpayers can also use tax-free allowances to reduce their tax obligation. These allowances are then given as rebates or refunds when verified.  The following allowances have been permitted:

  • Allowance for fossil fuel combustion – 60%
  • Carbon budget allowance – 5%
  • Trade exposure allowance – 10%
  • Performance allowance – 5%
  • Allowance for industrial process emissions
  • Offset allowance – 5%
  • Allowance in respect of fugitive emissions

Ensure that you are compliant

Persons that conduct activities that are above the threshold must license each of their emission generation facilities with SARS as customs and excise manufacturing warehouses for environmental levy purposes.

Reducing Carbon Emissions

Your plant can reduce its carbon footprint by implementing the following procedures:

  1. Monitor energy usage
    Implementing smart meters to indicate which part of your business uses the most amount of energy will help you manage your usage more accurately
  2. Reduce energy usage
    Once you have identified the part of your plant that is wasting energy, it is possible to tighten up and become more efficient. Small changes such as switching off machines that are on standby and switching lights and computers off can contribute to a reduction in energy usage.
  3. Improve the energy efficiency in your plant
    Consider making a few of these changes:
    - Change the light bulbs of your plant to LED’s
    - Switch off artificial light where possible and use natural light
    - Optimize air compressors
    - Regular maintenance of machinery and equipment
    - Control the heating and cooling of the building
  4. Recycle
    Ensure your plant has a good recycling system in place. It is essential to first attempt to minimise waste but if it’s not possible, it is best to recycle or reuse.
  5. Switch to green energy
    Using ‘green’ energy, such as solar power, will assist in reducing the carbon footprint of your factory.


If you would like to reduce the carbon footprint in your plant as well as help create a better and cleaner environment for your employees, CHAT to our experts now!