South Africa's Carbon Tax vs the EU ETS: Avoiding Double Taxation

South African exporters can claim a deduction for the SA carbon tax against their CBAM liability. This guide explains how the deduction works and how to maximise your carbon tax credit.

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

South Africa's Carbon Tax vs the EU ETS: Avoiding Double Taxation

CBAM includes a critical provision to prevent double taxation: exporters who have already paid a carbon price in their home country can claim a deduction against their CBAM liability. For South African exporters, this means the SA carbon tax reduces — but does not eliminate — the CBAM cost.

The SA Carbon Tax

South Africa introduced its Carbon Tax Act (Act 15 of 2019) on June 1, 2019. Key features:

▸Rate (2026): R236/tonne CO₂e
▸Coverage: Direct (Scope 1) emissions from large emitters
▸Allowances: Multiple tax-free allowances reduce the effective rate for most companies
▸Administration: Collected by SARS through the fuel levy and direct payments

The SA carbon tax is administered by the South African Revenue Service (SARS), which issues certificates confirming the carbon tax paid.

The EU ETS

The EU Emissions Trading System (ETS) is the world's largest carbon market. Key features:

▸Current price (April 2026): ~EUR 65.42/tCO₂
▸Coverage: Scope 1 emissions from large EU industrial facilities
▸Mechanism: Cap-and-trade — total emissions are capped and allowances can be traded
▸CBAM link: CBAM certificate prices are set weekly based on the average ETS allowance price

The Price Gap

The fundamental challenge for SA exporters is the significant gap between the SA carbon tax rate and the EU ETS price:

| Carbon Price | Rate | EUR Equivalent | |-------------|------|----------------| | SA Carbon Tax (2026) | R236/tCO₂ | EUR 11.5/tCO₂ | | EU ETS (April 2026) | EUR 65.42/tCO₂ | EUR 65.42/tCO₂ | | Net CBAM cost after deduction | | EUR 53.9/tCO₂ |

At current rates, the SA carbon tax offsets approximately 18% of the CBAM liability.

How to Claim the Deduction

To claim the SA carbon tax deduction against your CBAM liability:

▸Obtain a carbon tax certificate from SARS confirming the carbon tax paid on the production of the exported goods
▸Calculate the EUR equivalent of the carbon tax paid (using the exchange rate at the time of payment)
▸Provide this documentation to your EU importer (the Authorised CBAM Declarant)
▸The EU importer deducts the SA carbon tax from their CBAM certificate purchase requirement

For assistance with the deduction calculation and documentation, visit the Digital Product Passport Registry.

Frequently Asked Questions

Can SA exporters claim a deduction for the SA carbon tax against CBAM?

Yes. CBAM includes a mechanism to avoid double taxation. SA exporters who have paid the domestic carbon tax on their production can claim a deduction against their CBAM liability, reducing the net CBAM cost.

What is the current SA carbon tax rate?

The SA carbon tax rate for 2026 is R236/tonne CO₂e. At a ZAR/EUR exchange rate of approximately 20.5, this is equivalent to approximately EUR 11.5/tCO₂ — significantly below the EU ETS price of EUR 65+/tCO₂.

How much of the CBAM liability can be offset by the SA carbon tax?

The deduction equals the carbon price paid in South Africa, expressed in EUR. At current rates, the SA carbon tax offsets approximately 17% of the CBAM liability (EUR 11.5 ÷ EUR 65 ≈ 17%).

What documentation is needed to claim the SA carbon tax deduction?

You need: (1) a certificate from SARS confirming the carbon tax paid, (2) the calculation showing how the carbon tax relates to the embedded emissions in the exported goods, and (3) the EUR equivalent of the carbon tax paid.

Will the SA carbon tax rate increase to close the gap with the EU ETS?

The SA carbon tax is scheduled to increase annually. The government has indicated a trajectory toward R1,000/tCO₂ by 2030, which would close much of the gap with the EU ETS. However, the current gap remains significant.

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