Information technology (IT) solutions provider EDS Systems, a subsidiary of Economic Development Solutions (EDS), is set to provide a cloud-based IT solution to help local miners calculate and comply with the Carbon Tax Act regulations.
EDS provides services to the local mining, renewable-energy and construction sectors. EDS Systems has traditionally operated in the travel sector throughout Africa.
EDS MD Janine Espin confirms that it was decided to bring the two businesses together to present the Carbon Tax solution.
The solution will combine EDS’s experience in the local mining industry and EDS Systems’ IT background to develop and sell the carbon tax solution via a product brand entity.
The locally designed solution will assist businesses with monitoring and managing carbon emissions, thereby removing guesswork from carbon tax liability calculations, and simplifying compliance.
The solution is a system which enables entities to “plug in” emissions information and process data to produce a report that breaks down tax liability into the relevant emissions sources, providing visibility of a business’ carbon emissions.
After the tax liability status has been calculated, the tool calculates a liability amount while considering any offset reductions. We have partner companies which we can refer clients to for training on the current carbon tax liability, however our solution can provide a holistic service.
“As the world’s fourteenth-largest emitter of carbon dioxide, South Africa has an urgent responsibility to drive a positive response to climate change by striving for a lower-carbon economy,” explains EDS Systems operations director Francois du Plessis.
If the activities of companies in certain industries result in emissions above the legislated threshold, the companies are liable to pay carbon tax, he says, adding that “it is, therefore, crucial to have access to a tool that assists companies in monitoring and understanding carbon emissions to reduce them”.
Espin points out that, while many local mining companies are calculating carbon taxes in-house, it is often being done by internationally based head offices.
“If it’s being done at local offices, it’s more of an Excel-based, human-input and data- type scenario. We are trying to create a solution built specifically for the local market using local legislation,” she stresses.
Du Plessis emphasises that while certain carbon tax regulations might be similar globally, there are some differences, and it is unlikely that international regulations completely align with what is required from local tax authority the South African Revenue Service (Sars).
The solution would involve companies’ calculating and capturing their carbon footprint in general, consequently allowing them to use this information to set benchmarks to reduce their carbon footprint.
While Du Plessis claims that the solution will be accessible 24/7, he also emphasises the importance of its simplicity, as all employees, from a director to a financial administrator, will be able to use the solution.
“Being able to use these resources in-house and build a carbon tax online solution speaks to the importance of compliance systems and support. This is why we decided to develop a carbon tax solution. We see it as a broader aspect of compliance and, with our long years of experience in the sector, it will be a benefit,” Espin enthuses.
While EDS is aiming for the solution to be released in the second quarter of this year, Du Plessis notes that the company is finalising the solution and ensuring that it is verified to ensure risk limitations.
He adds that local guidelines are often not entirely clear, resulting in a learning curve for local companies to find out what to report on and what needs to be captured.
“We are trying to create a basic environment for organisations in which to capture emissions according to requirements of the Act and display that in a simplistic, Web-based environment. This will allow for the generation of relevant reports and outputs to submit carbon tax returns.”
The lack of clarity around many current related laws is evidenced by announcements from government that mines could potentially generate their own electricity on site and provide value in terms of reducing carbon emissions, adds Espin.
The lack of clarity on how this potential for self-generation will relate to carbon consulting will require more guidance from government in terms of how this will affect tax calculating, Espin states.
“Moreover, the money that will be generated from carbon tax currently simply goes into the fiscus, with no structure or indication regarding its allocation. Therefore, companies are going to be reluctant to comply with this tax until we have clarity on what the money will be used for,” stresses Espin.
Du Plessis concludes that this carbon tax solution is the first stage of the solution, which is focused on the mining industry. As many industries will be affected by the tax, the company can “grow the system and be agile when legislation is changed”.