Carbon Taxes to Increase 140% by 2030
In a Media Statement, the Deputy Minister of Electricity and Energy announced a significant, 140% rise in carbon tax, increasing from R190 to R462 per tonne by 2030. This adjustment is necessary to reduce greenhouse gas emissions in South Africa. This will impact businesses heavily reliant on coal-based electricity, with some industries facing a staggering 340% increase in tax payments as allowances are phased out.
The Scope 2 tax on indirect emissions and the European Union’s Carbon Border Adjustment Mechanism (CBAM) pose further challenges, potentially raising electricity costs by up to 60% and putting R52.4 billion in exports at risk. This tax hike emphasises the urgent need for businesses to transition to renewable energy.
How Accountants Can Help Clients
Identify clients who will be most effected, i.e.:
Energy-intensive industries,
Exporters to the EU, and
Businesses relying heavily on coal.
Give consideration to the increasing operating costs, tax compliance adjustments, and the need for strategic investments in cleaner energy solutions.
Advise clients on tax mitigation strategies, investing in renewables, and exploring government incentives for sustainability efforts.
The government is encouraging businesses to adopt renewable energy, highlighting its potential to stabilise energy costs, maintain profitability, and create new growth opportunities. Accountants play a vital role in helping businesses navigate these changes, ensuring resilience and compliance while unlocking the benefits of sustainable energy practices.
