South Africa ( Commonwealth Union ) _ In order to support South Africa’s clean energy transition, to enhance electricity supply, and to mitigate the effects of persistently high fuel prices, the government has launched a R9 billion tax relief initiative. Enoch Godongwana, the finance minister, introduced the proposal on Wednesday while delivering the 2023 Budget Address at Cape Town City Hall.The budget also includes modifications for transfer taxes, retirement tax tables, excise taxes on alcohol and cigarettes, and personal income tax tables based on inflation.
According to the 2023 Budget Review report, R5 billion was given to businesses through an increase of the renewable energy incentive, while R4 billion in relief was given to homeowners that install solar panels.The research states that above this point, there would be no increase in fuel charges, foregoing R4 billion in taxes.
Godongwana declared that in order to spur quick private investment and ease the energy situation, the tax incentive offered to enterprises to promote renewable energy would temporarily be increased. With the present incentive, companies can spread out the expenses of qualifying investments over one or three years, which improves cash flow in the early stages of a project. Godongwana further highlighted that no restrictions will apply to projects that qualify, and the incentive will be offered for two years to encourage short-term investment.
According to the Treasury, companies can write off 50% of qualified investments in wind, concentrated solar, hydropower projects under 30 MW, biomass, and photovoltaic (PV) projects over 1 MW in the first year, 30% in the second, and 20% in the third year respectively. Moreover, it is stated that Investors can write off 100% of the cost of PV installations under 1 MW in the first year. However, the Minister stated that only investments that are used for the first time between 1 March 2023 and 28 February 2025 will be eligible for the modified incentive.
According to Godongwana, modifications to the Bounce Back Loan Guarantee Plan are also being considered in order to encourage rooftop solar and to alleviate the energy-related challenges faced by small and medium-sized businesses. Godongwana further assured that, on a 20% first-loss basis, the government will guarantee loans for small and medium-sized businesses related to solar energy. The Energy Bounce Back Program will debut through the National Treasury in April 2023.
