South African businesses have limited time to benefit from renewable energy tax incentives
The South African Photovoltaic Industry Association (SAPVIA) urges businesses to act before the looming deadline to benefit from the government’s renewable energy tax incentive before it expires. These incentives were introduced to encourage private sector investment in renewable energy and support South Africa’s transition to a more sustainable energy future.
The solar energy tax credit (Section 6C) was a short-term incentive for individuals who installed rooftop solar panels between 1 March 2023 and 29 February 2024. This tax credit was only available for the 2023/24 tax year, allowing qualifying individuals to claim up to 25% of the cost of new and unused solar photovoltaic (PV) panels, capped at R15,000 per individual. While this incentive is no longer available, its impact on residential solar adoption is now being evaluated.
For businesses, the enhanced deduction for renewable energy (Section 12BA) remains available until 28 February 2025. This incentive allows businesses to deduct 125% of their capital investment in renewable energy assets that are brought into use between 1 March 2023 and 28 February 2025. After this deadline, the deduction will revert to the standard 100%. This incentive offers significant financial benefits, making now the best time for businesses to invest in renewable energy solutions.
Here are some of the key benefits of solar tax incentives:
- By claiming the enhanced Section 12B deduction, businesses can reduce their taxable income significantly.
- Tax incentives help businesses recover their initial solar investment quicker.
- Solar energy reduces reliance on the national grid, decreasing electricity expenses over the long term.
- These incentives promote renewable energy generation, easing pressure on the country’s power grid.
- By switching to solar energy, individuals and businesses contribute to reducing carbon emissions and achieving sustainability goals.
To assess the effectiveness of these incentives, National Treasury has launched an online survey, inviting all beneficiaries and stakeholders to share their experiences. The survey aims to collect data to evaluate whether these measures have met their objectives and to help shape future tax policies.
“These incentives have played a crucial role in driving renewable energy investment,” says Dr. Rethabile Melamu, CEO of SAPVIA. “We urge businesses who qualify, to take advantage of the remaining time to implement qualifying projects before the 28 February 2025 deadline.”
The key deadlines included:
- 1 March 2024: Sunset clause for the solar energy tax credit.
- 28 February 2025: Final date for businesses to have projects operational to qualify for the enhanced 125% Section 12B deduction.
SAPVIA remains committed to advancing the adoption of renewable energy and working with stakeholders to ensure a sustainable energy future for South Africa.
/ENDS
About SAPVIA
- The Solar PV Industry Association body SAPVIA speaks for the solar PV industry in South Africa.
- For more information, visit sapvia.co.za
References
Issued by Alkemi Collective on behalf of SAPVIA
