South Africa prices carbon through a national carbon tax rather than an emissions trading scheme. Companies that pay the tax can cover part of it with approved offsets, and anyone can buy voluntary credits. This guide explains how the carbon tax and its offset system work, what you can buy and the rules on tax and claims. For other countries, see our countries hub.
South Africa’s carbon tax
The Carbon Tax Act came into effect on 1 June 2019, and SARS administers the tax as an environmental levy under the Customs and Excise ActSource 4. It started at R120 per tonne of CO₂eSource 4, and National Treasury says it rose from R236 to R308 per tonne from 1 January 2026Source 5.
Companies whose emissions-generating facilities are at or above the carbon tax threshold must license each facility with SARSSource 4. The tax period is a year, and the carbon tax account is due in July after the end of the periodSource 4. Industry-specific tax-free allowances of 60% to 95% bring the effective rate well below the headline rateSource 4.
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| Item | Detail |
|---|---|
| In force since | 1 June 2019 |
| Headline rate from 1 January 2026 | R308 per tonne of CO₂e |
| Tax-free allowances | 60% to 95%, by industry |
| Offsets allowance from 1 January 2026 | 10% or 15% of total emissions |
| Administered by | SARS |
As of Oct 2026
The rate, start date and allowance range come from SARSSource 4 and the 2026 Budget ReviewSource 5; the offsets allowance comes from the Taxation Laws Amendment Act, 2026Source 6.
Motorists pay too, through a carbon fuel levy that rises to 19c a litre for petrol and 23c a litre for diesel from 1 April 2026Source 5.
Carbon budgets under the Climate Change Act
The President signed the Climate Change Act into law on 23 July 2024Source 7. Section 27 of the Act provides for mandatory carbon budgets, and the voluntary carbon budget phase ran from 2016 to 2024Source 7. The Taxation Laws Amendment Act, 2026 links the carbon tax to these budgets, with the link starting on a date the Minister of Finance sets by notice in the GazetteSource 6.
How the carbon offset allowance works
The Carbon Offsets Regulations were gazetted on 29 November 2019Source 8. They set the eligibility criteria for offset projects and the procedure for claiming the offset allowanceSource 8. When the tax started, companies could use offsets for either 5% or 10% of their total emissionsSource 8.
From 1 January 2026, the Taxation Laws Amendment Act, 2026 raised each offsets allowance by five percentage pointsSource 6:
- 15% of total emissions for fuel combustion and several other activities, up from 10%.
- 10% of total emissions for fugitive emissions from fuels, CO₂ transport and storage, and the mineral, chemical and metal industries, up from 5%.
National Treasury’s 2024 discussion paper had proposed a larger increase, of 15 percentage pointsSource 7. The Act, not the proposal, sets the limits that apply.
Which credits qualify
Offsets from approved projects under the Clean Development Mechanism (CDM), the Verified Carbon Standard (VCS), the Gold Standard and any approved local standard can be used under the carbon taxSource 7. Amendments gazetted in 2021 clarified that credits from approved CDM projects issued under national registries are eligibleSource 9.
Some limits apply:
- Renewable energy. Small renewable projects up to 15 MW are eligible. Larger ones qualify only in some cases, depending on the procurement window and the cost of the technologySource 8.
- No temporary credits. Temporary credits are excluded, and offset certificates cannot be transferredSource 8.
- Keep the paperwork. The offset certificate must be kept for the life of the project or 15 years, whichever is longerSource 8.
The Carbon Offset Administration System (COAS)
The COAS has been running since 2020 and is managed by the Department of Electricity and Energy. It approves eligible projects, lists and retires offsets, and issues the offset certificates that taxpayers use to claim the allowanceSource 7. Taxpayers claim the allowance on their annual DA 180 carbon tax account, supported by a carbon offset retirement certificateSource 10.
By October 2024, 89 companies were registered on the COAS, about 39 projects had been approved to supply credits, and about 17,515,310 tCO₂e of offsets had been retired for the carbon tax since June 2019Source 7. Renewable energy and waste-to-energy projects made up about 70% of approved projectsSource 7.
Buying voluntary credits in South Africa
The COAS serves carbon tax payers. If you are buying to cover your own or your company’s emissions voluntarily, you buy from online retailers, marketplaces and brokers, which sell credits from projects around the world. Voluntary markets let companies and individuals buy offsets outside compliance schemesSource 7.
Ask which registry holds the credits and check that they are retired in your name; our guide to how to verify carbon credits shows how. Where to buy compares providers side by side.
Reduce first, then offset
Cut what you can before you buy, then use credits for the emissions that are left. Our guide for individuals shows how to size a purchase.
Claims and tax notes
What you can say about offsets
The Consumer Protection Act bars suppliers from giving consumers false, misleading or deceptive representations about goods or services. It also bars exaggeration, innuendo or ambiguity about goods, services or their benefitsSource 11.
We found no South African government guidance written specifically for carbon offset or “carbon neutral” claims. Keep claims factual: say how many tonnes you retired, under which standard, and link to the registry record.
On tax, the offsets allowance is the main tax use of credits in South Africa: a carbon tax payer reduces its taxable emissions by the offsets it retires, within the limits aboveSource 6. We found no SARS guidance on VAT or income tax for voluntary offset purchases by individuals or companies. Ask an adviser about your own case.
How to check quality before you buy
Each Verra credit represents one tonne of CO₂e reduced or removedSource 1, and registries such as Gold Standard’s track every credit from issuance to retirementSource 2. That makes three checks possible before you pay:
- Is it in a public registry? Ask for the registry and serial numbers, and check the credits are retired in your name.
- Is the method credible? The ICVCM’s Core Carbon Principles set a quality threshold, and credits that meet it can carry the CCP labelSource 3.
- Is the seller clear? A good seller says what you are buying, what it charges and how and in whose name it retires credits.
Our quality section explains each check, and carbon credit scams lists the warning signs.
Article 6 deals
We found no official South African bilateral agreement under Article 6 of the Paris Agreement. National Treasury’s 2024 discussion paper said the Department of Forestry, Fisheries and the Environment was finalising a framework to guide Article 6 cooperationSource 7. The paper also proposed adding the Article 6.4 mechanism as an eligible standard for carbon tax offsets once its standards, methodologies and registry are in placeSource 7.
How to buy, step by step
Step 1: Work out what to cover
Estimate your footprint and cut what you can first.
Step 2: Know which market you are in
Carbon tax payers use COAS-approved offsets; everyone else buys voluntary credits.
Step 3: Pick a provider
Compare retailers, marketplaces and brokers on registry serials and certificates.
Step 4: Check the registry record
Confirm the credits are retired in your name on the registry.
Not sure how compliance and voluntary markets differ? Read voluntary vs compliance markets. For other carbon tax and offset systems, compare our guides to India and Canada.