National Treasury Invites Stakeholder Feedback on Tax Policy Reviews for Alcohol, Carbon Emissions, and Investment Schemes

Public consultation opens for proposals on excise tax adjustments, phase two carbon tax, and collective investment scheme tax treatment, with a deadline of December 13, 2024.

The National Treasury has issued a call for detailed stakeholder feedback on three key tax policy reviews: the taxation framework for alcoholic beverages, the design of South Africa’s carbon tax phase two, and the income tax treatment of collective investment schemes (CIS). These reviews aim to refine tax frameworks to address economic, environmental, and social goals, with final adjustments to be presented in the 2025 Budget.

Alcohol Taxation Review

Building upon the last review in 2014, the proposed policy adjustments on alcohol taxation aim to curb the harmful effects of alcohol while responding to industry developments and challenges like the rise in illicit alcohol trade. The new discussion document examines trends in alcohol consumption, the regulatory landscape, international tax standards, and potential policies such as minimum unit pricing (MUP) to reduce alcohol-related harm.

The Treasury encourages stakeholders to submit written comments to help shape an updated excise policy framework for alcohol. Written feedback should be sent to 2024Alcoholreview@treasury.gov.za by December 13, 2024.

Carbon Tax Phase Two

In line with South Africa’s climate goals under the Paris Agreement, the Treasury is also consulting the public on phase two of the carbon tax, set to take effect from 2026 to 2035. The proposals aim to reduce greenhouse gas emissions in alignment with the country’s Nationally Determined Contributions (NDCs), which target a reduction to 350-420 million tonnes of CO₂ by 2030 and net-zero emissions by 2050.

Key changes under review include updates to the basic tax-free allowance, carbon offsets, and incentives for energy efficiency. Treasury is soliciting input on the design of these tax adjustments, recognizing carbon tax as a central tool in South Africa’s transition to a low-carbon economy. Comments can be sent to carbontax@treasury.gov.za by December 13, 2024.

Tax Treatment of Collective Investment Schemes

Treasury is also seeking public comments on the taxation framework for income earned by collective investment schemes. The proposed review stems from 2018 consultations, which aimed to clarify when CIS returns should be taxed as revenue rather than capital gains under Section 25BA of the Income Tax Act.

Incorporating feedback from stakeholders, the document outlines new policy options to ensure clarity and fairness in the tax treatment of CIS income. Stakeholders are encouraged to submit comments to CIS-Tax@treasury.gov.za by the deadline of December 13, 2024.

Following the close of the consultation period, Treasury will revise its proposals based on public input, with final recommendations expected in the 2025 Budget. This series of consultations reflects the Treasury’s commitment to developing tax policies that promote economic stability, sustainability, and equity across sectors.