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.
