Legislation and Rules administered by SARS for the purposes of the Carbon Tax Act:
Customs and Excise Act No. 91 of 1964: Sections 20(4), 27, 54A – F, 87, 88, and 101
Customs and Excise Rules: Rules 54FD.01 to 54FD.05, 60.08(2)(a)(i) and 119A.R101A(d)
Customs and Excise Tariff: Schedule 1 Part 3F and Schedule 6
Value-Added Tax Act No. 89 of 1991: Section 7(3)(a)
Carbon Tax Act, No.15 of 2019: Section 4(1) and (2) and Schedule 2
Promotion of Administrative Justice Act, No.3 of 2000
Acronyms related to Carbon Tax
Carbon Tax (CBT)
Carbon dioxide (CO2)
Greenhouse Gas (GHG)
Customs and Excise manufacturing warehouse (VM)
Duty at source (DAS)
Submission forms related to Carbon Tax
DA 180 Environmental Levy Account for Carbon Tax
DA 180.01A.1 Fuel Combustion (Stationary)
DA 180.01A.2 Fuel Combustion (Non-Stationary)
DA 180.01B.1 Fugitive (Oil and Natural Gas)
DA 180.01B.2 Fugitive (Coal Mining and Handling)
DA 180.01C Industrial Process
DA 180.02 Carbon Tax Allowances
EXD 180 Electronic account via SARS eFiling
DA 185 Licence Applications
Please refer to our three previous articles (dated June 2019, January 2020 and September 2020) written about the inner workings of the Carbon Tax Act.
The annual carbon tax accounts and payments for the 2020 tax period, which started on 1 January 2020 and ended on 31 December 2020, are now due. The Excise declaration (EXD 180) account, with its relevant annexures and carbon tax payments, can be submitted on eFiling from 1 July 2021. The closing date for submissions is 29 July 2021 at 15:00.
A taxpayer who pays carbon tax is any person who conducts a taxable activity subject to carbon tax by exercising operational control over an emissions facility where that activity occurs. Every taxpayer must obtain a consolidated license for the combination of each emissions facility at its customs and excise manufacturing warehouse for the generation of emissions liable to carbon tax.
Licence applications must be completed on form DA185 and its annexure DA185.4B2
All licensees of customs and excise manufacturing warehouses for the generation of emissions liable to carbon tax must submit their EXD 180 accounts, together with the payment of their carbon tax liability, for the 2020 tax period or any part thereof.
Note that the current Completion Notes are uploaded together with the current DA 180 Front Page of the carbon tax account at the “Find-a-Form” link on the SARS website at https://www.sars.gov.za/da-180-environmental-levy-account-forcarbon-tax-external-form/
The validity period for licenses for customs and excise manufacturing warehouses for the generation of emissions liable to carbon tax is from the effective date until 31 December 2021 and thereafter 31 December of the following year.
All such licensees must therefore annually apply to renew their licences on or before 31 December of each year, as from 2021, by submitting an updated form for licensing (DA185 and its annexure DA185.4B2) with the required supporting documents to the SARS Excise Registration and Licensing Hub office. The office is located in Alberton, but in light of the current lockdown restrictions visiting this office may not be possible; electronic submissions are the only option at present.
Background of the legislation
Carbon Tax is legislated in terms of the Carbon Tax Act, 2019, and administered as an environmental levy in terms of Chapter VA of the Customs and Excise Act, No. 91 of 1964 (the Act) and the Rules
thereto.
Section 54AA of the Act provides for the administration and collection of Carbon Tax. It requires the administration of allowances and limitation of allowances prescribed in the Carbon Tax Act, 2019, as rebates in terms of the Act. It also requires taxpayers to license any premises on which emissions occur and to submit accounts and payments, as prescribed by rule.
In terms of Rule, 54FD Carbon Tax (CBT) is imposed on the carbon dioxide (CO2) equivalent of Greenhouse Gas (GHG) emissions generated in SA liable to environmental levy in terms of item 157.00 in Section F of Part 3 of Schedule 1.
The carbon tax is levied in respect of the carbon dioxide equivalent of those GHG emissions resulting from fuel combustion, industrial process and fugitive emissions in accordance with the relevant emissions determination methodology or methodologies contemplated in Section 4 of the Carbon Tax Act, 2019.
Every person who has operational control over a taxable activity at a total installed capacity equal to or above the tax threshold, or in respect of which a tax threshold of none applies, must obtain a consolidated license for the combination of each emissions facility where activity occurs as its Customs and Excise manufacturing warehouse (VM) for the generation of emissions liable to CBT.
The liability for CBT Levy on the carbon emissions generated in the combination of the emissions facilities of the licensee’s consolidated VM is assessed and the levy collected on a duty at source (DAS) basis.
The assessment of the CBT levy is a self–assessment process by the licensed entity, which he/she must declare on the DA 180 account, and where required its relevant annexures. There after the information, as completed on the DA 180 and its annexures must be carried forward to the EXD 180 electronic account before submission, via SARS eFiling system, to the Excise office.
A tax payer becomes liable to the Carbon Tax Act if such tax payer:
i) Has operational control of an activity listed in Schedule 2 of the Carbon Tax Act; and
ii) Has operational control of that activity at a total installed capacity equal to or above the tax threshold or a tax threshold of none applies in respect of that activity.
Note – “Tax threshold” means the value determined by matching the activity listed in the column ‘Activity / Sector’ with the corresponding entry in the column ‘Threshold’ in Schedule 2 of the Carbon Tax Act.
All licensees must be registered for eFiling, as the submission of the returns and payments can only be made via eFiling. Accounts and payments must be submitted as prescribed in the rules in the format and in accordance with the procedures specified in the eFiling system [refer to Rule 119A.R101A(d) on the SARS website].
Other payment methods may only be used if the eFiling system is not available. Licensees can register for eFiling on the SARS Website (www.sars.gov.za).
If licensees are unable to access the eFiling service, they must visit the nearest SARS Branch Office (B/O) for assistance. The licensee must present the return [DA 180 and relevant annexure(s) (in an hard copy format)] and the B/O will upload the DA 180 and annexures, if any, on Service Manager (SM). A printed copy of the EXD 01 with the Payment Reference Number (PRN) will be handed to the
licensee for payment.
Keeping of records
a) In terms of rule 54FD.01(c)(ii), every licensee must keep proper books, accounts and documents and any data created by means of a computer, relating to the activity in respect of which the license is
issued.
b) The Licensed entity of a VM must keep records of:
i) All emissions as generated by the emissions facility(s) under his/her operational control.
ii) Any other relevant information as it pertains to the emission equivalent generated at his/her emission facilities.
c) All licensees are required to maintain and keep records of all emissions equivalents generated of carbon emissions.
d) A licensee may keep electronic records if it can be readily converted into hard (paper) copies and made available to SARS when required / requested.
e) For purposes of this Act, the retention period for all Excise related documents (prescribed Customs and Excise documents as well as relevant trader’s commercial and financial records) is five (5) years, subject to the provisions of Rule 60.08(2)(a)(i).
Penalties
a) Failure to adhere to the provisions of the Act, as set out in this document, is considered an offence.
b) Offences may render the client liable to, as provided for in the Act:
i) Monetary penalties;
ii) Criminal prosecution; and/or
iii) Suspension/cancellation of registration license
Author Craig Tonkin