However, the Inland Revenue Authority of Singapore (IRAS) has moved to waive the tax from such activities. IRAS has said that from Nov 23 this year, the issuance, transfer and sale of carbon credits, including in digitised form, is to be treated as “neither a supply of goods nor a supply of services, i.e. an excluded transaction” for GST purposes.
Demand for carbon credits — which are now exempt from goods and service tax (GST) — will increase among emissions-intensive enterprises, such as petrochemical companies, when Singapore hikes its carbon tax from 2024, says KPMG.
While Singapore set its initial carbon tax rate at $5 per tonne of CO2 equivalent (tCO2e) generated — a significantly lower rate than envisioned — when it was introduced in 2019, the tax will soon increase over three phases. It will rise to $25 in 2024 and to $45 in 2026, before increasing to between $50 and $80 per tC02e by 2030.
