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Boost Your Business with Solar: South Africa’s Big Tax Break for Renewable Energy

Updated: May 7

South Africa’s Big Tax Break for Renewable Energy

Are you looking for ways to cut your business’s energy costs and reduce its carbon footprint? The South African government has a fantastic opportunity for you – a significant tax incentive that turns investing in solar energy into a no-brainer!

Here's how South Africa’s Big Tax Break for Renewable Energy can Boost Your Business:

What's the Incentive?

The temporary renewable energy tax break, inserted as Section 12B of the Income Tax Act, is a significant boon to businesses. Here’s what it offers:

  • A deduction of 125% of the cost of qualifying renewable energy assets.

  • Assets must have been brought into use for the first time between March 1, 2023 and February 28, 2025.

  • Applies to grid-tied solar PV systems, solar water heaters, biomass, and small scale hydro.

Who Can Claim It?

  • Businesses registered for corporate income tax.

  • Sole proprietors or other taxpayers conducting business activities.

Extra Support: Energy Bounce-Back Loan Guarantee Scheme

Suppose your business needs a boost to finance its solar investment. In that case, the Energy Bounce-Back (EBB) Loan Guarantee Scheme is designed to provide easier access to funding through banks, Development Finance Institutions, and non-bank SME finance providers.

How to Claim the Incentive

Your business will claim the enhanced deduction through its standard tax returns:

  • Corporate income tax – ITR14 return

  • Personal income tax – ITR12 return

  • Trusts conducting business – ITR12T return

Example of Savings

Here’s a compelling example of how the tax incentive works in practice:

  • Solution: Single-phase 8kW 7.7kW solar solution

  • Total Cost: R141 515 (excluding VAT)

  • Tax Savings: R47 761.31

This means an investment in solar panels and mounting structures, typically costing around R37,100, could effectively be covered by the tax savings alone.


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