The carbon tax regime in Singapore is governed under the Carbon Pricing Act 2018 ("CPA") that provides for, among other things, requirements relating to registration, reporting and payment of tax in relation to greenhouse gas emissions. Singapore recently consulted on raising its climate ambition to achieve net zero by 2050. Increasing carbon tax is part of Singapore's strategy to achieve its raised climate ambition. On 3 October 2022, the Carbon Pricing (Amendment) Bill ("Bill") was tabled for First Reading in Parliament. This follows an earlier consultation by the Ministry of Sustainability and the Environment ("MSE"). You may read about the main aspects of the consultation in our Legal Update here. MSE also provided its Response to feedback received on the consultation.
The Bill seeks to amend the CPA in the following key aspects:
- Revising the carbon tax rate and carbon price. Under the CPA, a taxable facility is required to pay carbon tax. The current carbon tax rate is $5/tCO2e. The Bill provides for the progressive increase in the carbon tax rate. The CPA also sets out the concept and value of a carbon credit, and governs how a carbon credit may be dealt with. Currently, each carbon credit has a value of $5. The Bill renames "carbon credits" as "fixed-price carbon credits" and provides for progressive increase in the carbon price.
- Providing for the grant of allowances for eligible taxable facilities to reduce carbon tax. In the consultation, a transition framework was proposed to provide time for emissions-intensive trade-exposed companies to adjust to a low-carbon economy. The Bill sets out provisions for the grant of allowances to eligible taxable facilities to reduce the amount of carbon tax payable for an emissions year. Please refer to the new Division 1A of Part 5 set out in the Bill.
- Providing for the surrender of eligible international carbon credits in place of fixed-price carbon credits for the purposes of paying the carbon tax. There are also provisions to establish the International Carbon Credits Registry and international carbon credit registry account, as well as for various related matters.
- Revising registration and emissions reporting obligations (in particular, where there has been a transfer of operational control over a business facility), and the basis for liability for carbon tax. The Bill also contains provisions to allow the deregistration of a business facility as a reportable facility or a taxable facility if the registered person of the business facility, despite having operational control over the business facility, has ceased to operate the business facility and has no intention of resuming its business activity within the next 36 months after such cessation.
For more information, click here to read our Legal Update.
