The South African Revenue Service (SARS) has taken note of the emergence of a renewables subsector making profits.
Speaking on the reported revenue outcomes for the tax authority, the SARS commissioner Edward Kieswetter, said that while loadshedding presents real risks to the fiscal framework, the tax authority has noted the emergence of a renewables subsector.
Seeing the significant triple-digit percentage increases in import values year-on-year, SARS is now studying and setting itself to service the emerging subsector.
According to Kieswetter, the tax authority aims to ensure maximum tax compliance from the onset of new opportunities that the renewables sub-sector presents.
“In the Western Cape, for instance, we have noted a number of wind energy linked entities that have moved from being in a refund position over the past 24 months who are now moving into a VAT paying position as their projects come on stream,” said the commissioner.
“In particular, for the 2022/23 financial year, collections from wind farms in the Western Cape across all tax types increased by 26.6% to R2.7 billion,” said Kieswetter.
The head of SARS said that the entity has also had its eyes on a ‘drastic increase’ in the importation of solar panels, with the top ten importers experiencing growth in import value of 73% year-on-year, totalling R3.8 billion in 2022.
Other import increases include those of static converters, of which the top ten importers saw growth in value of 609% year-on-year, totalling R5.1 billion in 2022, and lithium-ion batteries, the top ten importers experienced import growth of 240% year-on-year, totalling R7.8 billion in 2022.
“All of this points to an opportunity that the renewables sub-sector presents,” said SARS.
As load shedding shows little sign of easing, businesses, households, and even the provincial governments are turning to alternative power supplies to supplement or completely take over their energy supply.
Over the course of this year so far, load shedding has been at record high levels on the path of surpassing the frequency of 2022.
When looking at the prior year, during a period that was still plagued by load shedding but at a slightly lower level, there was a total of R2.2 billion worth of solar photovoltaic (PV) panels bought in the first five months of the year, according to solar provider Solana Energy.
What has pushed the shift to renewables further has been the government’s active efforts to incentive the purchasing of alternative power supplies.
As outlined in the finance minister’s latest budget speech, from 1 March 2023 onwards, businesses are able to reduce their taxable income by 125% of the cost of an investment in renewables, and individuals who install rooftop solar panels will be able to claim a rebate of 25% of the cost of the panels, up to a maximum of R15,000.
According to the minister, in terms of the rooftop solar rebate could be used to reduce their tax liability in the 2023/24 tax year and is available for one year.
On top of these initiatives, in April, the National Treasury launched the Energy Bounce Back Scheme, which guarantees solar-related loans for small and medium enterprises on a 20% first-loss basis.