ESG Tax Strategy - IoT Advisory South Africa

Analysing the sustainability of your business.

Sustainability

info@iotadvisory.co.za

Private sector investment in electricity generation

2023 Expanded Renewable Energy Tax Incentive

During the Budget Speech on 22 February 2023, the Minister of Finance announced an enlargement of the Renewable Energy tax incentive in section 12B of the Income Tax Act, No 58 of 1962.

The renewable energy tax incentive allows a business to deduct the capital cost of equipment owned or purchased through an instalment credit agreement in the year it is first used to generate electricity from renewable sources in its business (i.e. wind, solar, hydropower and biomass).

The renewable energy tax credit also applies to improvements made to equipment used to generate electricity from renewable sources, as well as foundations or supporting structures considered to be an integral element of the equipment and on which the equipment is mounted or fastened.

From 1 March 2023 up to and including 28 February 2025, under the expanded renewable energy tax incentive, businesses will be able to claim a 125% (one hundred and twenty-five per cent) deduction in the first year that the equipment is put into use for all renewable energy projects with no thresholds on generation capacity.

Example: The Tax Saving is for businesses with Taxable Income in that where the equipment for a solar PV system costs R1 million and it is put into use on 24 September 2023 then the business will be able to claim R1,25 million as a deduction in the tax year ending 29 February 2024.

Let us explore if participation in the renewable energy tax incentive is the right fit for your business!

Book a consult Get in touch

Environmental - Social - Governance

Sustainability Consulting Services

Making taxes work for your sustainability goals.

Environmental

Environmental criteria require a company to look at the effect of its operations on the environment. The company needs to draw up a roadmap to change its operational model to integrate clean energy, reduce waste while maintaining productivity. The roadmap will include short-, medium-, and long-term goals to minimise the environmental impact of the business. The integration of tax considerations in drafting the environmental strategy is important with the expansion of environmental taxes and incentives for lowering environmental impact.

Social

Social criteria require a company to look at the effect of its operations on society looking at company policies on employee health and safety, people management, diversity and inclusion, socioeconomic development, tax incentives, government grants, community development and human rights. In shifting to sustainability, a company also needs to add transparent tax reporting to include any activities undertaken to improve the society surrounding its operations and/or physical location(s).

Governance

Governance criteria require a company to look at its adherence to corporate governance and regulatory requirements by providing accurate and detailed information for investors, employees, local communities and the broader society. The company will examine its decision-making structures and the adherence to the relevant policies at every level of the business in order to adhere to corporate governance and ethics. As part of the tax strategy, the company will assess its general approach to tax reporting and compliance.

Looming deadline for mandatory EPC display for buildings

Energy Performance Certificate

Energy Performance Certificates to be displayed by building owners and organs of state

As part of the efforts to decarbonise South Africa, which has approximately 15% of carbon emissions from buildings, legislation has to be implemented to encourage improving the energy performance of buildings to lower carbon emissions.

Energy performance to meet the different needs associated with the use of a building, which may include, inter alla, heating, hot water heating, cooling, ventilation and lighting but excluding measured or assessed energy consumed by garages, car parks and storage areas as well as energy consumed by outdoor services.

Regulations were published by the Department of Minerals and Energy for the mandatory display and submission of energy performance certificates (EPC) for certain types of non-residential privately or government owned buildings as well as those operated or occupied by an organ of state.

These non-residential buildings would be categorised for entertainment, public assembly, theatrical, indoor sport, places of instruction and offices in accordance with Regulation A20 of the National Building Regulations.

Want to invest in renewable energy while reducing corporate income taxes?

Private Sector Investment In Electricity Generation

info@iotadvisory.co.za

Latest IoT Advisory Insights

Featured Insights

The latest in Taxation, Regulatory Compliance, and Sustainability simplified by IoT Advisory

Nthabiseng Baloyi
/
15 August 2022

Tax Savings: Energy Efficiency Incentive for Carbon Emissions

Nthabiseng Baloyi
/
24 October 2022

Looming Deadline: Mandatory EPC Display

An effective tax strategy is a key component of a successful business. An experienced tax strategist at IoT Advisory can develop a winning strategy for your business that accounts for contingencies and evolving tax laws.

Book a consult