The Role of SARS in CBAM Compliance for South African Companies

The South African Revenue Service (SARS) administers the SA carbon tax, which generates the tax credit that reduces CBAM liability. Understanding the SARS-CBAM connection is essential for SA exporters.

Published April 2026·Last updated April 2026·carbonborderadjustment.co.za

SARS and the SA Carbon Tax: The Foundation of the CBAM Credit

The South African Revenue Service (SARS) administers the Carbon Tax Act 15 of 2019, which introduced South Africa's carbon tax in June 2019. This tax is the primary mechanism by which South Africa prices carbon domestically, and it is the source of the CBAM credit that reduces the CBAM liability of SA exporters' EU buyers.

Understanding the SARS-CBAM connection is essential for SA exporters who want to maximise their CBAM credit and support their EU buyers' compliance.

How the SA Carbon Tax Works

The SA carbon tax applies to facilities with greenhouse gas emissions above 100,000 tCO₂e per year. The tax is administered through SARS's carbon tax return system, which requires covered facilities to:

▸Report their greenhouse gas emissions annually
▸Apply applicable tax-free allowances (basic allowance, trade exposure allowance, carbon budget allowance, offset allowance)
▸Calculate their net taxable emissions
▸Pay carbon tax on net taxable emissions at the applicable rate

The 2026 carbon tax rate is R236/tCO₂e. After allowances, most SA facilities pay an effective rate significantly below the headline rate.

The CBAM Credit Mechanism

The EU CBAM regulation provides that the CBAM certificate obligation is reduced by the carbon price already paid in the country of origin. For SA exporters, this means the carbon tax paid to SARS reduces the number of CBAM certificates their EU buyers must purchase.

The credit calculation is:

Credit ratio = (SA carbon tax rate in EUR) ÷ (EU ETS price)

At R236/tCO₂ (approximately EUR 11.8 at a ZAR/EUR rate of 20) and an EU ETS price of EUR 65/tCO₂, the credit ratio is approximately 18%. This means EU buyers of SA goods need approximately 18% fewer CBAM certificates than they would for goods from a country with no carbon pricing.

Documentation Requirements

To claim the CBAM credit, EU declarants must provide evidence of the carbon price paid in South Africa. SA exporters should obtain and retain:

▸SARS carbon tax return confirmations
▸Carbon tax payment receipts
▸Carbon budget compliance certificates (if applicable)
▸Carbon offset certificates (if applicable)

These documents should be provided to EU buyers annually, covering the calendar year for which the CBAM declaration will be submitted.

The Limitation: Allowances Reduce the Effective Rate

The SA carbon tax includes substantial tax-free allowances that reduce the effective rate paid by most facilities. If a SA facility pays carbon tax at an effective rate of R50/tCO₂ (after allowances) rather than the headline R236/tCO₂, the CBAM credit is calculated on the effective rate paid, not the headline rate.

SA exporters should calculate their effective carbon tax rate (total carbon tax paid ÷ total covered emissions) and use this figure in their CBAM credit documentation.

For a complete CBAM compliance registration pathway, visit the Digital Product Passport Registry.

Frequently Asked Questions

What is SARS's role in CBAM compliance?

SARS administers the South African carbon tax under the Carbon Tax Act 15 of 2019. SA exporters who pay the carbon tax can claim a credit against their CBAM liability, reducing the number of CBAM certificates their EU buyers must purchase. SARS issues carbon tax compliance certificates that SA exporters can provide to their EU buyers as evidence of carbon price paid in South Africa.

How does the SA carbon tax credit reduce CBAM liability?

The CBAM credit for SA carbon tax is calculated as: (SA carbon tax paid in ZAR ÷ ZAR/EUR exchange rate) ÷ EU ETS price per tCO₂. This ratio is applied to the embedded carbon of the exported goods to determine the credit. For example, if the SA carbon tax is R236/tCO₂ and the EU ETS price is EUR 65/tCO₂, the credit ratio is approximately 5.5%, meaning EU buyers need 5.5% fewer CBAM certificates.

What documentation does SARS provide for CBAM purposes?

SARS issues carbon tax returns and payment confirmations that serve as evidence of carbon price paid in South Africa. SA exporters should retain these documents and provide copies to their EU buyers to support the CBAM credit calculation. The Digital Product Passport Registry can help SA exporters compile and present this documentation in the format required by EU CBAM declarants.

Does SARS have a specific CBAM compliance programme?

As of 2026, SARS does not have a dedicated CBAM compliance programme. However, SARS's existing carbon tax administration infrastructure — including the carbon tax return system and the carbon budget system — provides the documentation that SA exporters need for CBAM purposes. SARS has indicated it is monitoring CBAM developments and may introduce specific guidance for SA exporters.

What is the current SA carbon tax rate?

The SA carbon tax rate for 2026 is R236 per tonne of CO₂ equivalent (tCO₂e). The rate increases annually in line with CPI plus 2%. The carbon tax applies to facilities with greenhouse gas emissions above 100,000 tCO₂e per year, with various tax-free allowances that reduce the effective rate for most facilities.

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