Solar panels with VAT?

Regulation & Policy, Renewables    May 5, 2021 4:17 PM

The Minister of Mines and Energy (MinEnergia), Diego Mesa, explained and defended the possibility of taxing solar panels with VAT.

The energy sector has shown its concern about the effects that measures such as the change of VAT to solar panels may have, La Republica reported.

“In the Development Plan, we put the solar panels in the automatically excluded category, and it worked well when most of the goods were imported. However, local producers of these goods were discriminated against because they paid 19% VAT on their inputs,” Mesa explained.

Mesa said that this decision will not affect the next renewable energy auction.

“In the energy transition bill, incentives for renewables are improved. Law 1715 is not touched, so the certificate for the VAT exclusion can be requested,” Mesa highlighted.

The expert said that the government has no inconsistencies in its commitment to the energy transition.

“We are going to continue pushing this process and taxing these assets,” Mesa said.

Bottom-Line: The government is working on a new tax reform due to the tense social situation that the country is facing.

However, taxing solar panels – and changing the cash flow profile of existing projects – does not sound like a good incentive to boost renewable energy in the country.

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