Income tax credit for persons who acquire solar system

The content originally appeared on: Jamaica News Loop News

The House of Representatives, on Tuesday, passed the Income Tax (Amendment) Act, 2024, which seeks to implement a regime to provide income tax credit to individuals who acquire and install a solar photovoltaic system at their primary place of residence.

Minister of Finance and the Public Service, Dr Nigel Clarke said the Bill seeks to set out the appropriate legal framework that would allow individuals to benefit from this income tax credit.

“This measure forms part of a much broader goal of reducing our dependence on fossil fuels and substantially increase the share of renewable energy in our local energy mix,” Dr Clarke stated.  

He said Jamaica has set a target to achieve a 50 per cent use of renewable energy in the electricity generation sector by 2030, and that the utilisation of appropriately targeted fiscal measures is critical to achieving this result.

“You will also recall that in my budget presentation earlier this year, as a part of the 2024/25 Budget, I indicated that the government will also be reducing the corporate income tax rate for independent power producers producing 75 per cent or more of their energy from renewable sources, from 33 1/3 per cent to 25 per cent,” Dr Clarke said.

“The objective of this rate reduction is to promote growth within the renewable energy sector but providing a more favourable tax environment and providing more of an incentive for larger-scale investment in renewable energy technologies, such as wind and solar,” he added.

The minister said that the major components utilised in the installation of a solar photovoltaic system, such as the solar photovoltaic panels, solar inverters and solar batteries, including lithium-ion batteries, are also exempt from the payment of General Consumption Tax (GCT).

“These fiscal measures are proof of the government’s commitment to achieve the target of 50 per cent use of renewables by 2030. The government will continue to explore measures, fiscal and otherwise, to ensure that this target is met.

“The Bill sets out the criteria that will enable individuals who have installed a solar photovoltaic system at their primary residence to benefit from the income tax credit,” Dr. Clarke said.

In addition, the Bill makes provisions for, among other things, an income tax credit at the rate of 30 per cent of the acquisition and installation cost of the solar photovoltaic system for the taxpayer primary residence, up to a maximum cost of $4 million.

“This means that the maximum credit an individual will be allowed to claim is $1.2 million. This measure shall apply to solar photovoltaic systems acquired and installed on or after January 1, 2023 [that is] for the year of assessment 2023.

“The value of the income tax credit will be applied to the acquisition installation price of the solar photovoltaic system and will be claimable in the year the system is installed,” he stated.