Section 12B
Solar finance glossary · South Africa
Quick definition
Section 12B is the provision of the South African Income Tax Act that allows a taxpayer carrying on a trade to deduct the cost of qualifying renewable energy assets, including solar photovoltaic systems, on an accelerated basis instead of over the asset's normal useful life.
Under the standard rule, solar PV generation assets of more than 1 MW are written off over three years at 50%, 30% and 20%. Solar PV systems of 1 MW or less qualify for a 100% deduction in the year they are first brought into use. The deduction covers the plant and directly related installation costs, but only for assets owned and used by the taxpayer in its trade.
From 1 March 2023 to 28 February 2025 an enhanced 125% allowance applied to new and unused renewable energy assets brought into use for the first time in that window, with no capacity limit. That measure has lapsed: assets brought into use from 1 March 2025 fall back to the ordinary rates above.
The asset owner holds the allowance, so which party claims depends on the finance structure. ArkFlow is a software platform that facilitates showing the tax effect of each structure in a proposal.
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Section 12B: The Solar Tax Deduction for South African Businesses →Section 12B solar tax lets South African businesses claim an accelerated deduction on qualifying renewable assets. Here is how it works with solar finance.
ArkFlow is a software platform that facilitates solar finance origination. It is not a bank, lender, credit provider, tax adviser or financial adviser. This definition is general information, not a credit offer or advice. Funders make their own credit decisions and tax treatment should be confirmed with a registered practitioner.