A call for clarity on solar tax Incentives for small businesses and sole proprietors

Issued by Henro Kruger MP – DA Shadow Deputy Minister of Small Business Development
26 Feb 2023 in News

The recent budget speech delivered by Finance Minister Enoch Godongwana has brought attention to the ongoing energy crisis in South Africa. The National Treasury has proposed solar tax incentives and relief to promote a rapid transition towards renewable energy sources and to reduce consumer dependence on Eskom.

While the Democratic Alliance (DA) welcomes any steps taken towards reducing Eskom’s dominance, we are concerned that these measures do not go far enough and do not provide enough clarity to address the scale of the energy crisis we face. It is clear that the energy crisis in South Africa is a matter of great urgency, and we need comprehensive and effective solutions to tackle it.

While the proposed tax incentives for businesses and households are a step in the right direction, we are disappointed that the Finance Minister did not provide more clarity on subsidizing sole proprietors’ rooftop solar systems. It is imperative that we support these entrepreneurs, as they are disproportionately exposed to the effects of load-shedding.

We are concerned about the unclear and ambiguous announcement made by the Finance Minister regarding the tax incentives for private households and individuals. The lack of clarity raises questions about the structure and allocation of these incentives. In particular, we are concerned about the eligibility criteria for small business owners and sole proprietors who work from home, as it is not clear whether they will be classified as individuals or households and thus able to claim only a 25% rebate or whether they will be eligible for the 125% taxable income reduction. The DA will be seeking answers to these questions and pushing for a more comprehensive and effective plan to address South Africa’s energy crisis.

The DA recognizes that the transition to renewable energy sources requires significant investment and changes to our current regulatory framework. While we appreciate the tax incentives for businesses that adopt renewable energy projects, we are concerned that the lack of a streamlined regulatory framework will prevent many small and medium-sized enterprises (SMMEs) from accessing these incentives. The DA calls for the red tape unit in the Presidency to develop a red tape regulatory framework that will make it easier for SMMEs to access the tax incentives and facilitate their transition to renewable energy.

The DA believes that a combination of accessible incentives and a clear regulatory framework is necessary to ensure that all businesses and households, regardless of their size or resources, have the opportunity to contribute to a greener and more sustainable South Africa. It is time for the government to take bold action to address the energy crisis and invest in the future of our country. The DA is committed to working towards a more sustainable and equitable South Africa for all.