Cova Advisory executives comment on managing the Carbon Tax
Gauteng-based management consultancy Cova Advisory has highlighted that businesses in South Africa have the opportunity to retrieve a large portion of their revenues that they lose to the newly instated Carbon Tax, provided that these businesses remain decisive in their approach.
Cova Advisory specialises in the domain of tax and government policy, offering consultancy services on government incentives, sustainability strategies, tax advisory (including specialised Carbon Tax advisory services), customs and excise support, as well as support with black economic empowerment ownership structures.
Earlier this month, the firm held an event in collaboration with ACT Financial Solutions to help calm the waters with respect to the new Carbon Tax. The new legislation, which effectively levies a hefty charge on carbon emissions, has caused concern over its potential stifling of domestic businesses and crucial sectors such as mining and mineral extraction.
Several experts have sought to advise firms in South Africa on how to navigate the new regulatory challenges, and Cova Advisory has become the latest to offer its take. While some have highlighted the range of allowances that companies can obtain under the carbon tax legislation, Cova points to the carbon offsets as a way out.
“The carbon offset market in South Africa is likely to be R3.5-billion a year. Companies will need a strong information technology system to control the whole process, to avoid making an inaccurate tax payment,” he explained, adding that companies needed detailed and accurate collation of information on emissions and reporting mechanisms within firms,” explained Director at Cova Advisory Duane Newman.
“Many firms are not yet ready to do this. Many companies have been surprised to learn that they should already have been reporting. Carbon pricing is complex. There is an upstream price, a compliance price, a reputational price and a financing price,” he added.
ACT is a financial advisory firm that was also involved in setting up the seminar. The firm also specialises in the domains that house the carbon legislation, namely environmental compliance, corporate sustainability and fuels. Experts at the ACT expressed hope that the proceeds from the new tax would be put to proper use.
The legislation is a means to deter high-emission production activities.“The money collected by carbon tax should support the transition away from the carbon economy. Very often, many governments prefer to use these revenues in other ways,” said Managing Director at ACT Federico di Credico.
