Tax incentives are available for installing solar PV.
- Installation cost is VAT deductible.
- The full cost of the solar system is deductible from income in the first year.
- The South African Government is offering an energy efficiency incentive for every kWh saved.
- Preparation for the proposed carbon Tax.
It is great news for SMEs that SARS offers business owners certain tax concessions for utilizing renewable energy – specifically a special tax incentive for installing solar PV (photovoltaic) energy solutions. Renewable solar energy systems such as Stelios sysems hold tax perks for businesses from the get-go. “Financially it makes good sense for businesses to install a solar PV system as they can deduct the VAT portion which is already 15% of the total cost if they are VAT-registered,”.
The second big tax advantage is that business owners can deduct the full cost of the installation of a solar energy solution from their business income tax in the first year, according to the terms of Section 12B of the Income Tax Act. This 100% accelerated capital allowance applies to business solar PV solutions that produce less than 1 megawatt of power.
The South African government wants to promote the efficient use of energyas a means to safeguard the security of supply. To this end the South African Government is offering an energy efficiency incentive for every kWh saved.
The incentive is called 12L
In January 2016, the South African Government increased the 12L Energy Efficiency tax incentive from 45c per kWh saved to 95c per kWh saved. What this means is that now it makes financial sense to take advantage of this tax incentive if your project is over a certain threshold for kWh’s saved annually (as there are measurement and verification costs associated with the program).
The incentive is a tax break i.e. a business or tax paying entity pays less tax, it is NOT refund, rather a tax forgone by Government.
Government’s purpose with this allowance is to encourage the use of renewable energy in the business sector by supporting smaller solar PV energy projects that have a low environmental impact and use little water.
Another tax benefit of installing solar PV: This year, government is introducing a carbon tax for businesses that emit excessive amounts of greenhouse gasses through especially transportation vehicles and electricity generation. As a low-carbon source of energy, solar power can help businesses to become greener and therefore avoid carbon tax. Savings on electricity bill.
The financial benefits of installing an efficient business solar solution go beyond tax concessions.
With a state-of-the-art, efficient system from Stelios Energy Solutions, SMEs can significantly cut their monthly electricity bills. A solar solution can pay for itself with what the business saves on electricity. “The repayment term of a solar PV system for a commercial installation is around 3 – 5 years, depending on certain factors like self-consumption and the tariff structure. Solar panels that have a 25-year production warranty, it is like buying 25 years’ prepaid electricity at 5 years’ cost. Stelios Energy Solutions offers financing options for SMEs that do not have the capital available to purchase the system outright.
The SME owner, you can now afford to consider a renewable energy solution that looks after the environment and the all-important cash flow.