SARS has introduced a comprehensive draft guide outlining tax incentives to boost renewable energy generation. ​ Taxpayers can benefit from accelerated deductions, enhanced deductions for new assets, and deductions for expenses related to infrastructure construction. ​ These incentives aim to encourage investment in renewable energy projects, support sustainable practices, and drive economic growth in the renewable energy sector. ​

 The guide emphasizes the importance of adhering to regulations to maximize benefits and prevent double deductions, highlighting the government's commitment to promoting a greener economy and transitioning towards cleaner energy sources.

The tax incentives for renewable energy generation in South Africa include: ​

• Deductions for acquiring renewable energy assets under Section 12BA(2) and Section 12BA, allowing accelerated deductions and deductions equal to 125% of the asset cost. ​
• Deductions for expenses on constructing roads, erecting fences, and supporting structures exceeding five megawatts under Section 12U. ​
• Deemed deductions for assets used in previous years for trade purposes under Section 12B(4B). ​
• Disposal considerations under Section 12B(6) for lease interests or rent rights. ​
• Deductions for machinery, plant, implements, utensils, and articles used in renewable energy production under Section 12B, with varying deduction percentages and conditions. ​
• Enhanced deductions for new and unused assets under Section 12BA, also allowing deductions for supporting structures and improvements. ​
• Additional deductions for construction of roads, fences, and supporting structures under Section 12U, including pre-trade expenditure deductions. ​
• Incentives aim to promote investment in renewable energy assets, sustainable practices, and growth in the renewable energy sector. ​

The draft guide is open for public comment. We will keep you informed of developments in this regard.