South Africa’s Minister of Finance, Enoch Godongwana, has published the notice for the Renewable Energy Premium in the government gazette. The Renewable Energy Premium Notice is published in terms of the Carbon Tax Act, 2019 (Act no 15 of 2019) and provides for companies to offset part of their carbon tax based on the amount of renewable energy consumed to power their operations.
This provision for taxpayers to offset their carbon tax liability based on renewables consumed will be effective for the first phase of the carbon tax which runs until December 2022.
“A notice setting out the renewable energy premium rates per kilowatt hour for eligible renewable energy technologies for the 2019 tax period was gazetted in June 2020 (Gazette No. 43453). Taxpayers, however, requested clarity on the renewable energy premium rates to be used to determine the tax deduction for the 2020 tax period, as the applicable renewable energy premium rates were limited to the 2019 tax period,” says South Africa’s Treasury in a statement.
“To address the concerns raised by taxpayers, a draft renewable energy premium notice was published for public comment in August 2021 proposing changes to the above mentioned notice and clarifying that the renewable energy premium rates were applicable for the 2020 tax period. This clarification was welcomed by taxpayers and no additional comments were received from stakeholders on the draft notice,” the statement continues.
The gazetted 2021 Notice for the Renewable Energy Premium gives effect to the removal of the limitation of the tax period for which the rates would be applicable. Any future adjustments of the renewable energy premium will be made by way of an announcement in the Budget.