South Africa's Energy Saving Tax Allowance Detail

IN SOUTH Africa there is much anticipation for section 12L energy saving tax incentive, which is now a step closer to implementation.

In section 12L the proposal is that taxpayers will be entitled to claim an allowance for energy efficiency savings resulting from activities in the production of income. The allowance will mean taxpayers will benefit from all energy saving each year in which incremental energy efficiency saving is realised. 

The section has been delayed as it requires the South African Department of Energy (DOE) to draft and publish regulations which will govern the allowance. As we reported recently the proposed regulations were released by the DOE for public consultation. 

Under the draft regulations taxpayers claiming the allowance must for each applicable year of assessment comply with the following:


Be registered with the South African National Energy Development Institute (SANEDI) in respect of any energy efficiency savings measure for which the allowance is intended to be claimed;

Appoint a measurement and verification professional to compile a report that contains a computation of the energy efficiency savings in respect of the year of assessment for which the allowance is claimed;

Submit a report to SANEDI.

  • Submit a certificate obtained from SANEDI to the South African Revenue Service together with a claim for the allowance. 

The proposed allowance will be based on a formula and the certification from SANEDI. The formula will take the baseline energy usage at the start of each year of assessment , the end of the year energy usage figures and the annual energy efficiency savings expressed in kilowatt hours - the formula expressed as: (Energy efficiency savings x Applied rate) /2 

Picture of South Africa Johannesburg Braamfontein Eland by NJR ZA.

Thursday 29th September 2011

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