DRAFT REGULATIONS: TRADE EXPOSURE ALLOWANCE

The document presents draft regulations for the Trade Exposure Allowance under section 10 of the Carbon Tax Act, 2019, in South Africa. These regulations establish a mechanism to provide transitional support to specific sectors and subsectors to mitigate the risk of carbon leakage and maintain industry competitiveness while implementing carbon pricing to meet Paris Agreement goals.

• The Trade Exposure Allowance is designed as a transitional support measure to address the "potential risk of carbon leakage and reduced industry competitiveness" while ensuring the carbon tax continues to drive GHG emission reductions.
• Taxpayers generally determine their allowance by matching their sector to a percentage listed in Annexure A. For those operating across multiple sectors, the allowance is calculated as a sum of percentages based on a formula involving the average total production of the relevant sectors over the preceding three tax periods, using data from Statistics South Africa's "Manufacturing: Production and Sales" or "Mining: Production and Sales" releases.
• An alternative method for calculating the allowance is available for taxpayers who believe the standard sector-based allowance does not accurately reflect their trade exposure. This method calculates 'trade intensity' based on the monetary value of exports and imports relative to total sales. The resulting allowance is tiered: no allowance if trade intensity is under 10%, an allowance of the intensity multiplied by 0.33 if between 10% and 30%, and a flat 10% allowance if trade intensity is 30% or greater.
• Annexure A specifies varying allowance percentages by sector. Many industrial and mining sectors, such as 'Mining of coal and lignite', 'Basic Chemicals', and 'Motor vehicles', are assigned a 10.00% allowance. Other sectors have lower rates, such as 'Production, collection and distribution of electricity' at 4.87% and 'Beverages' at 3.46%, while 'Printing , recorded media' and 'Other transport equipment' are assigned 0.00%.

APA

Centre for Environmental Rights (2019). DRAFT REGULATIONS: TRADE EXPOSURE ALLOWANCE. https://cer.org.za/wp-content/uploads/2019/05/Draft-Trade-Exposure-Regulations-2-Dec-2019.pdf?x21779

Chicago

Centre for Environmental Rights. DRAFT REGULATIONS: TRADE EXPOSURE ALLOWANCE. 2019. https://cer.org.za/wp-content/uploads/2019/05/Draft-Trade-Exposure-Regulations-2-Dec-2019.pdf?x21779.

Wikipedia

{{cite report |author=Centre for Environmental Rights |title=DRAFT REGULATIONS: TRADE EXPOSURE ALLOWANCE |date=December 2019 |url=https://cer.org.za/wp-content/uploads/2019/05/Draft-Trade-Exposure-Regulations-2-Dec-2019.pdf?x21779 |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{centreforenvironmentalrights2019draft, author = {{Centre for Environmental Rights}}, title = {{DRAFT REGULATIONS: TRADE EXPOSURE ALLOWANCE}}, institution = {Centre for Environmental Rights}, year = {2019}, month = dec, url = {https://cer.org.za/wp-content/uploads/2019/05/Draft-Trade-Exposure-Regulations-2-Dec-2019.pdf?x21779}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }