South Africa: Proposed temporary expansion of renewable energy tax incentive
A proposal to temporarily extend the current renewable energy tax incentive
A proposal to temporarily extend the current renewable energy tax incentive
A proposal to temporarily extend the current renewable energy tax incentive was announced in the 2023 National Budget Speech (delivered on 23 February 2023). Read TaxNewsFlash
Under the proposal, taxpayers would be eligible for a once-off deduction of 125% of the qualifying costs for renewable energy projects brought into use on or after 1 March 2023 but before 1 March 2025, with no threshold on generation capacity.
The draft Taxation Laws Amendment Bill (issued on 31 July 2023) included the temporary enhanced incentive in respect of new and unused renewable energy assets (including their supporting structures, as well as the direct cost of installation or assembly) used to generate electricity from:
- Wind power
- PV solar energy
- Concentrated solar energy
- Hydropower
- Biomass comprising organic wastes, landfill gas or plant material
No deduction would be allowed when the asset has been let by the taxpayer under a lease other than an operating lease as defined in section 23A unless:
- The lessee derives income from trade under such lease
- The period of the lease in question is at least five years or a shorter period shown by the taxpayer to be the useful life of the asset
Read an August 2023 report [PDF 215 KB] prepared by the KPMG member firm in South Africa
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