Durban – The CEO of Liquid Intelligent Technologies SA, Deon Geyser said they welcome the Budget speech by Finance Minister Enoch Godongwana with the announcement of the government’s much-needed focus on helping Eskom alleviate power outages, as well as its commitment to stimulating the growth of renewable energy.
Geyser said they were delighted to hear the finance minister’s plans to empower Eskom to invest in transmission and distribution infrastructure to mitigate the impact load shedding has on South Africa’s businesses.
He said they were pleased that businesses would receive tax deductions for investment in wind, solar, hydropower, biomass, and other renewable energy projects they undertake which would prompt enterprises to move to sustainable power sources.
“Liquid looks forward to partnering with the government in its efforts to create growth and development in a digitally connected South Africa, in which no one is left behind,” he said.
In his speech, Godongwana said the tax incentive available for businesses to promote renewable energy would be temporarily expanded to encourage rapid private investment to alleviate the energy crisis. The current incentive allows businesses to deduct the costs of qualifying investments over a one- or three-year period, which creates a cash flow benefit in the early years of a project.
“There will be no thresholds on the size of the projects that qualify, and the incentive will be available for two years to stimulate investment in the short term,” he said.
Furthermore, he said the Treasury said businesses were able to deduct 50% of the costs in the first year, 30% in the second and 20% in the third for qualifying investments in wind, concentrated solar, hydropower below 30 megawatts (MW), biomass and photovoltaic (PV) projects above 1 MW.
“Investors in PV projects below 1MW are able to deduct 100% of the cost in the first year. Under the expanded incentive, businesses would be able to claim a 125% deduction in the first year for all renewable energy projects with no thresholds on generation capacity,” said the Treasury.
Godongwana said the adjusted incentive would only be available for investments brought into use for the first time between March 1, 2023 and February 28, 2025.
He said for a business with positive taxable income, the deduction will reduce its tax liability. For example, a renewable energy investment of R1 million would qualify for a deduction of R1.25m. Using the current corporate tax rate, this deduction could reduce the corporate income tax liability of a company by R337 500 in the first year of operation.
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