Energy-efficiency tax incentive for SA

December 6th, 2013, Published in Articles: Vector

Information from SANEDI

On 8 November 2013, finance minister Pravin Gordhan announced the promulgation of the Regulations on Allowance for Energy Efficiency Savings in terms of Section 12L of the Income Tax Act to address “shortfalls and gaps” in SA’s energy efficiency drive.

This allowance, which is granted for savings incurred through energy-efficiency improvements, is a tax incentive based on savings measured and verified through the South African National Energy Development Institute (SANEDI) in cooperation with the South African Revenue Services (SARS). SANEDI will provide the administration of the technical component of the tax incentive.

Gordhan said “several implementation tools” had been put in place since the publication of the National Energy Efficiency Strategy in 2005 and encouraged businesses to intensify their energy efficiency improvement measures. He said the Department of Finance, together with SARS and SANEDI, would present workshops nationally to “help businesses understand and acquaint themselves with the registration process and overall implementation” from January to March this year.

He also announced the launch of the Private Sector Energy Efficiency (PSEE) project by the Department of Finance and the National Business Initiative (NBI) (see article on page 3). The project is designed to help commercial and industrial companies, irrespective of size, to identify energy efficiency saving measures, and is funded by the government of the United Kingdom under the SA-UK bilateral cooperation agreement to address the impacts of climate change.

Gordhan advocated a multi-policy approach to the reduction of carbon emissions and cited the National Climate Change Response Policy, which calls for a “mix of economic instruments including market-based instruments ranging from carbon taxes to emissions trading schemes and GHG mitigation efforts”.

He said government saw the energy efficiency tax incentives as the “proverbial carrot” which would “soften the impact of ‘the stick'”

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