South Africa’s Department of Energy has released regulations for public comment relating to a tax break that could be earned by companies who are able to provide evidence of energy efficiency savings. The regulations introduce the South African National Energy Development Institute (SANEDI) as the body responsible for Measurement and Verification Reports which would be undertaken by a professional person accredited by the South African National Accreditation System and registered with SANEDI.

Before an application can be made to the South African Revenue Services for the tax break, the claimant must appoint a Measurement and Verification professional who will perform measurement and verification of energy efficiency savings and compile a report in that regard. The claimant will have to submit the report compiled by the professional person to SANEDI who will then evaluate the report and grant a final decision.

SANEDI will appoint an eight member committee to be headed by its CEO to deal with these reports. The committee will need to have five members present in order to reach a valid decision. Where the committee concludes that the report is accurate and reflects the energy efficiency saving of the claimant as well as complying with the South African National Standard 50010, SANEDI will issue a certificate which will be submitted to SARS together with the claim.

The certificate issued by SANEDI will contain information on the baseline calculation at the beginning of the year of assessment including the annual energy efficiency savings expressed in kilowatt hours for which the allowance is claimed. The name and accreditation number of the Measurement and Verification body under whose auspices the Measurement and Verification Professional compiled the report must also be included in the report.

The draft Regulations, which are in line with Section 12L of the Income Tax Act, clarify the framework and methodology for the issuance of energy savings certificates and have been opened for public comment for a period of 60 days from the date of publication which was on 16 September 2011.

This information should not be regarded a comprehensive discussion of the topics addressed and, in particular, should not be taken as legal advice or relied upon. For further information please contact: lulu@warburtons.co.za