Further welcome tax incentives announced for renewable energy sector

Renewable energy is seen as the long term future to the planet’s energy demands as a result of the increasing effects of climate change due to the long term use of fossil fuels. South Africa, in particular, has certain obligations as a party to the United Nations Framework Convention on Climate Change (UNFCCC) to ensure the reduction of greenhouse gas emissions and to incentivise investments in low carbon, clean energy. In addition to the environmental factors, South Africa’s load shedding and insufficient power supply has resulted in a further demand for the greater procurement and use of renewable energy.

Green, greener, greenest – a ruling on section 12K of the Income Tax Act

The recent announcement by Eskom that it would reconsider its position on the use of renewable energy has caught the attention of many in the renewable energy industry. The Income Tax Act, No 58 of 1962 (Act) contains a number of tax incentives which are available to participants in the renewable energy industry, including the exemption of certified emission reductions (CERs), contained in s12K of the Act. On 9 June 2016, the South African Revenue Service (SARS) issued Binding Class Ruling 053 (Ruling), which deals with the application of s12K of the Act in the context of a Clean Development Mechanism (CDM) project. The parties to the Ruling are a non-profit association of green energy producers (Applicant), the project developer and sponsor of the registration of the CDM project with the Executive Board of the United Nations Framework Convention on Climate Change (UNFCCC) (Project Developer) and the owners of the … Continue reading

Where there’s smoke there’s fire (and carbon tax) – National Treasury releases the Draft Regulations: Carbon Offsets

In November 2015, the Draft Carbon Tax Bill (Draft Bill) was published by National Treasury, setting out the framework within which carbon tax would be levied. We reported on the main tenets of the Draft Bill in our Tax Alert of 20 November 2015 (Carbon tax in South Africa). On 20 June 2016, flesh was given to this framework with the release of the Draft Regulations: Carbon Offsets (Draft Regulations), which were published in terms of clause 20(b) of the Draft Bill. The Explanatory Note for the Draft Regulations on Carbon Offset (Explanatory Note) was released at the same time. Section 4 of the Draft Bill states that carbon tax will be levied in respect of greenhouse gas (GHG) emissions resulting from:

SARS issues important tax ruling for renewable energy financing structures

Author: Mansoor Parker (ENSAfrica). On 13 April 2016, the South African Revenue Service (“SARS”) issued Binding Private Ruling 228 (“BPR 228”), which dealt with the issue whereby a project company becomes an operating company for the purpose of s8EA of the Income Tax Act, No 58 of 1962 (“ITA 1962”). This question is an important one in the context of financing the activities of renewable energy project companies but its relevance stretches further to many other infrastructure-related project companies.

Draft Carbon Tax Bill – Liable entities

The South African National Treasury has published a Draft Carbon Tax Bill (the Bill) for public comment. This article explores the aspects of the carbon tax regime that will feel out-of-the-ordinary for professional tax practitioners. Like the phenomenon to which it is intended to respond, namely climate change (as much an economic challenge as an environmental one), a comprehensive response to the carbon tax will require tax professionals to look beyond their usual sphere of operations and to cooperate with professionals from a range of other disciplines. This is also a function of the tax design which encompasses elements of tax law, carbon markets law, environmental law and financial and operational strategy. This article considers a fundamental connection established by the Bill between tax law and environmental law.

Carbon Tax Draft Bill published for comment

On Monday, 2 November 2015, the South African National Treasury published a Draft Carbon Tax Bill (the “Bill”) for public comment by 15 December 2015. At first glance, the Bill does not stray too far from the carbon tax design that Treasury has been proposing since 2010 in various discussion papers, national budget speeches and their associated explanatory memoranda and responses to stakeholder commentary on the design. Whilst the Bill does not change the essentials, it does progress certain of the detail while providing only a tantalising glimpse of some of the more interesting aspects of the design. While the proposed tax is vaunted as thecarbon tax, this is not the only or the first carbon tax imposed in South Africa. Emissions on new vehicles are subject to emissions taxation and approximately five years ago, the fossil fuel electricity levy was introduced. These are both taxes on greenhouse gas emissions, … Continue reading

Draft bill on carbon tax released

Author: Heinrich Louw (International Law Office). Having been the subject of various discussion papers since 2011, the introduction of a carbon tax in South Africa is becoming a reality with the release of a draft carbon tax bill earlier this month. It has been clear since at least 2013 that South Africa would opt for a carbon tax in order to price carbon, as opposed to an emissions-trading scheme. The draft bill sets out the mechanics of the carbon tax. Greenhouse gas levy Essentially, the carbon tax will be levied in respect of the greenhouse gases that result from:

Room for improvement in SA Carbon Tax Bill, says Centre for Environmental Rights

Author: Chantelle Kotze (Mining Review). At the start of December, the Centre for Environmental Rights (CER) submitted comments on the Carbon Tax Bill, 2015, which was published for public comment on 2 November by National Treasury. The Bill, which is intended to take effect in January 2017, aims to put a price on carbon by levying a tax of R120 per each ton of carbon dioxide equivalent (CO2e) emitted.

Carbon Tax – Liable Entities

Author: Mansoor Parker and Andrew Gilder (ENSafrica) On Monday 2 November 2015, the South African National Treasury published a Draft Carbon Tax Bill (the “Bill”) for public comment, with the comment period commencing immediately and continuing until 15 December 2015. Among the themes that we will be exploring in this series of articles on the Bill are the aspects of the carbon tax regime that will feel out-of-the-ordinary for professional tax practitioners. Like the phenomenon to which it is intended to respond, namely climate change (as much an economic challenge as an environmental one), a comprehensive response to the carbon tax will require tax professionals to look beyond their usual sphere of operations and to cooperate with professionals from a range of other disciplines. This is also a function of the tax design which encompasses elements of tax law, carbon markets law, environmental law and financial and operational strategy. While … Continue reading

Carbon tax in South Africa

Author: Heinrich Louw. After having been the subject of various discussion papers since 2011, the introduction of a carbon tax in South Africa is becoming a reality with the release of the Draft Carbon Tax Bill (Draft Bill) earlier this month. It has been clear since at least 2013 that South Africa would opt for a carbon tax in order to price carbon, as opposed to an emissions trading scheme. The Draft Bill now sets out the mechanics of the carbon tax.