South Africa: Extension of utilization period of carbon offsets for purposes of carbon tax in 2023 budget

Carbon tax-related measures proposed in the 2023 budget

Carbon tax-related measures proposed in the 2023 budget

The 2023 budget includes a proposed measure that would change the utilization period of the carbon offsets (as provided for in the Carbon Offsets Regulations) to align with the extension under the 2022 budget of the first phase of the carbon tax by three years through 31 December 2025. Read TaxNewsFlash

There are also other carbon tax-related measures proposed in the 2023 budget, and all of the proposed measures would become effective 1 January 2023.


The Carbon Tax Act No. 15 of 2019 was signed by the president in May 2019 and effective from 1 June 2019.

The carbon tax law sets out how the tax will be managed for Phase 1 (due to end on 31 December 2025) but is silent on the specifics of Phase 2—intended to run from 1 January 2026 through 31 December 2030, leaving many companies with unanswered questions regarding the future financial impact of the tax. 

Carbon tax rate increase

The carbon tax legislation specifies that the initial rate of carbon tax of R120 per tonne will be increased by consumer price index (CPI) +2% per year until 31 December 2022, and thereafter the rate of tax will be increased only by CPI. Therefore, the carbon tax rate will increase from R144 per tonne of carbon dioxide equivalent (CO2e) to R159 per tonne of CO2e for the 2023 calendar year.

Read a February 2023 report [PDF 222 KB] prepared by the KPMG member firm in South Africa


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