As global awareness of climate change grows, the push towards sustainable and renewable energy sources is stronger than ever. For businesses across various sectors, investing in solar energy is not only an environmentally responsible decision but also a financially savvy one, thanks to the Enhanced Renewable Energy Tax for Business incentive in Section 12BA in the Income Tax Act. Here’s a detailed look at the financial benefits available for businesses that generate power using solar energy.

The Importance of Solar Energy
Solar energy represents a clean, renewable source of power that reduces greenhouse gas emissions and dependence on fossil fuels. For businesses, adopting solar energy leads to significant long-term savings on energy costs, enhance corporate social responsibility profiles, and potentially increase property values. Moreover, the South African governments has recognizes these benefits and have introduced this tax incentive to encourage businesses to invest in solar power systems.

So What's The Enhanced Renewable Energy Tax Incentive?

It is a programme introduced by the government of South Africa aimed at growing private investment in electricity generation from renewable energy sources. The prorgamme is also designed to give an opportunity to those business that would not have been in a position to invest in renewable energy. Businesses registered for corporate income tax as well as sole proprietors and other taxpayers who are
conducting business activities can claim an upfront deduction of 125 per cent  (125%) of the cost incurred to acquire qualifying assets used in the generation of electricity (including supporting structures) against their taxable income.

To find out more about Section 12B of the Income Tax Act click here to read the FAQs issued by National Treasury. 

Renewable Energy Credits (RECs)

Businesses that generate solar energy may also earn Renewable Energy Credits (RECs) for the power they produce. These credits can be sold on the open market to other companies looking to offset their carbon footprints, providing an additional revenue stream for solar energy producers.

Conclusion
Investing in solar energy is a powerful way for businesses to reduce their carbon footprint, lower energy costs, and demonstrate a commitment to sustainability. With the robust tax incentives available, the financial barriers to adopting solar energy are significantly reduced, making it an increasingly attractive option for businesses of all sizes. By taking advantage of these incentives, businesses can not only achieve substantial savings but also contribute to a greener, more sustainable future.

Are you thinking of getting your business powered by solar energy? Contact us to discuss options, we'll be pleased to give you a free energy audit and a site assessment. Finance options available.