The Department of Environmental Affairs and Tourism is responsible for inter alia, the promotion of sustainable development, the conservation of our natural resources, as well as the protection and improvement of the quality and safety of the environment. With this in mind Government has implemented various environmental taxes for the purpose of protecting and conserving the local environment, one such tax being the environmental levy on electricity generated from non-renewable sources.
The South African Revenue Service (SARS) has published the procedure that will apply to the producers of electricity from nonrenewable sources in South Africa. In terms of the guidelines, which came into effect on 1 September 2009, any person who is engaged in generating electricity from non-renewable sources in an electricity generation plant with an installed capacity exceeding 3 megawatt (MW), but not greater than 5 MW must register with the Commissioner in terms of the Customs and Excise Act No 91 of 1964 (the Act).
Such person must furnish the relevant Controller or Branch Manager with a duly completed application form, DA 185, together with the applicable annexure DA 185.4A12 and supporting documentation.
Should any person be engaged in or planning to be engaged in generating electricity from non-renewable sources in an electricity generation plant with an installed capacity which exceeds 5 MW, such person must license with SARS such electricity generation plant as a customs and excise manufacturing warehouse (VM). The procedure setting out the establishment of a customs and excise warehouse is contained in Section 19 and 27 of the Act and Rules, which also includes the lodging of a plan of the premises and putting up security.
Upon receipt of the application for licensing the premises as a VM, the Controller or Branch Managers must also perform an inspection of the premises to ensure that the premises do in fact exist, that it is in fact an electricity generation plant and that the plant has the necessary control measures in place.
Once the VM has been approved by the Controller or Branch Manager, an introductory security amount applicable to licensees of R5,000 together with the warehouse license (DA 103) must be submitted to SARS.
There are however certain exceptions and electricity generated under the following circumstances will not be liable to the payment of environmental levy:
- electricity generated by electricity generation plants with an installed capacity not exceeding 5 MW;
- electricity generated from renewable sources; and
- electricity generated from co-generation whether or not from non-renewable sources.
SARS also requires the licensees of a VW to submit monthly electricity levy accounts (DA 176 form) to the Controller or Branch Manager in whose area the warehouse is licensed, and this account must reach the Controller or Branch Manager within 30 days after the last day of the accounting period, but not later than the second last working day of the month following such last day. If a company has more than one licensed warehouse for the generation of electricity, it must submit separate electricity levy accounts for each VM.
The rate at which the electricity levy will be calculated is regulated by Schedule No. 1 Part 3B of the Act at the time of the generation in a warehouse which amounts to 2c/kW.h.
There is also a duty on every licensee to keep proper books and accounts for a period of five years calculated from the end of the calendar year in which such document was created, lodged or required for the purposes of any customs and excise procedure.
Freek van Rooyen, Director and Cara Gilmour, Candidate Attorney