The Covid-19 pandemic and subsequent lockdown saw a number of measures implemented to provide financial relief to South African individuals as well as businesses, notes Eckart Zollner, Head of Business Development at EDS Systems.

One such measure was the deferment of the Carbon Tax deadline from the end of July 2020 to the end of October 2020 for Phase 1 contributors.

The deferment time has passed in the blink of an eye and October is just around the corner, but are organisations prepared? With so much post-lockdown pressure on businesses, it makes sense for Phase 1 contributors to use technology to meet their legislative obligations clearly and with minimal effort. This includes tools that free up time and resources, enabling the business to focus on minimising the impact of the pandemic.

Operating in survival mode

Are businesses ready for the new deadline? Right now the main concern for most organisations is to stay afloat. Current conditions have not permitted them to focus on carbon tax compliance as needed, but this does not exempt them from the legislative obligation. Instead of ignoring the problem, organisations have the opportunity to smarten their approach to carbon tax compliance with the right software tools for the job – tools that can capture, report and help them to visualise their carbon output so that they can take the steps required to satisfy the South African Revenue Service (SARS).

Complex carbon tax framework, simplified

Meeting obligations in terms of the Carbon Tax Act, under which Phase 1 emitters are required to capture and report on their carbon-equivalent emissions and pay a tax on emissions above a certain threshold, shouldn’t be as complicated as the legislation makes it out to be.

The first step toward compliance is capturing data for their processes and products that are liable for this tax, which must be examined through the procurement and utilisation cycle of products.

While this cycle is defined in the Intergovernmental Panel on Climate Change (IPCC) tables contained in the Act, there are still several tax-free allowances that need to be considered in order to accurately calculate tax liability and ultimately determine a way forward (in terms of a decarbonisation strategy to reduce future liability).

In anticipation of this new environmental tax on businesses, carbon analysis tools have been specifically designed for South African conditions and are already available on the market. Such carbon tax tools simplify half a dozen tables contained in the Act, as well as dozens of complex calculations into a single tool.

This streamlining of calculations assists companies in the tax admissions process, by capturing the utilisation throughout the organisation’s value chain (whether from combustion, fugitive emissions, waste processes etc.) It also factors in the applicable allowances and brings all the numbers back to a reportable emissions-equivalent figure.

Gone are the days of Excel spreadsheets and formulae, providing security against mistyping or data overwriting due to human error. These carbon tax tools elucidate all the required input data, and the formulae cannot be touched or overwritten.

Clarity in calculating tax liability

In addition to the benefit of administrative simplification and quality assurance, such tools deliver the benefits of being able to visualise the organisation’s carbon footprint, while calculating accurate tax liability. Visualising the carbon footprint of an organisation’s value chain makes it easier to identify a starting point for decarbonisation efforts, as well as track the effects of any process changes, or any input material changes in real-time.

Making use of intelligent analytics coded around the exact requirements of the Carbon Act gives organisations the capability to report on their carbon footprint, in addition to being able to see the bigger picture in terms of the impact of their emissions. These tools give emitters everything they need to manage, monitor, and advance their decision-making in reducing their carbon footprint, ultimately reducing their carbon tax liability to SARS.

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