Latita Africa looks at the future of carbon taxes

Carbon tax adjustments and new compliance mechanisms are part of the amendments contained in the 2025 Draft Tax Bills and Regulations recently published by the South African Revenue Service (SARS) and National Treasury.

ESG Global recently asked Jemaine Manikus, CEO of Latita Africa and Lethabo Maditsi, tax legal specialist at Latita Africa, three clever questions on the future of carbon taxes, granular compliance data and using carbon tax exposure as a financial tool.

How can companies move beyond simple tax compliance and leverage their carbon tax exposure as a financial tool?
Carbon tax should be seen not just as a cost of compliance but as a tool for smarter business. By building carbon costs into planning, companies can spot where efficiency and renewable energy projects deliver real financial value, while offsets and reliefs help reduce liabilities and free up cash for innovation. This approach also strengthens access to capital, as investors and lenders increasingly reward credible sustainability performance, and it creates an edge in supply chains where low-carbon credentials are becoming essential. Companies that treat carbon tax as a strategic lever rather than a burden will be better positioned to compete both locally and in global markets where carbon pricing is fast becoming the norm. Companies that treat carbon tax purely as compliance are leaving value on the table. Those that integrate it into financial strategy, investment decisions, and stakeholder positioning will not only lower costs but also open doors to capital, partnerships and growth.

Why do the new compliance mechanisms require more granular data?
Granular data is the backbone of the new compliance environment because both regulators and markets now demand accuracy, transparency, and accountability. In South Africa, carbon tax reporting and sustainability disclosures are moving closer to international norms, where companies must show not just total emissions but how they are measured, managed and reduced at source. Globally, frameworks like the EU’s Carbon Border Adjustment Mechanism or IFRS Sustainability Standards require detail at facility, process, and product level to verify claims and prevent “greenwashing”.

For business leaders, this detail is not just red tape; it’s a management tool. Granular data highlights inefficiencies, guides investment and builds trust with investors and supply-chain partners. In short, more detail means better decisions, stronger performance and greater resilience in a world where sustainability is non-negotiable.

What steps should companies take today to build resilience against potentially escalating carbon taxes in the future?
The reality is that carbon taxes are likely to increase as governments push harder on climate commitments, so companies need to act now. Carbon tax rates are scheduled to rise progressively towards and beyond 2030. Companies cannot afford to treat this as a short-term cost. Businesses must therefore prepare for a future where carbon costs are embedded into the price of doing business. Resilience can be built in three ways. Firstly, by integrating carbon scenarios into financial planning and stress testing. Secondly, by maximising available allowances such as the carbon offset and carbon budget allowances while they remain in place. Thirdly, by linking executive decision-making with emissions performance. Investors are increasingly rewarding businesses that treat carbon tax not as a line-item expense, but as a driver of operational efficiency and innovation. Offsets and tax allowances can help in the short term, but long-term resilience depends on structural change; designing operations and supply chains that can withstand tighter regulation.

The policy message is unambiguous: carbon tax is tightening, data obligations are growing and non-compliance will become more costly. The businesses that thrive will be those that adapt early, treating carbon exposure not as a penalty, but as a platform for long-term competitiveness.