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The IRS Has Recently Stipulated That A 30% Tax Credit Can Be Granted To The PV Projects Connected To The Grid Before The End Of 2019.
- Jul 10, 2018 -

At the end of June, the US National Revenue Service (IRS) clarified when solar developers were allowed to enjoy 30% of the investment tax credits (ITC) on solar energy projects. 30% of the tax credits will be available by the end of 2019, when it will gradually reduce by 4 years and eventually reach 10%. Under the guidance of the new regulations, as long as developers "start building" solar projects by December 31, 2019 and completed by the end of 2023, the project is eligible for all 30% of the investment tax credits.

The rules clearly explain what is "start building". One way is to show "actual work" at the site or at the factory for the project manufacturing equipment, because it can work in the factory only after the project is ordered to the manufacturer to order the orders of the binding equipment.

The other is the developer at least 5% of the total cost of the project. Cost is usually not just "happen" by spending money; developers must accept the delivery or ownership of services or equipment.

The US tax agency combined the "start - up" rules with the wind energy production tax credit rules to allow 5% safety port rules or manual labor tests.

According to the 5% safe harbor rule, as long as developers have undertaken 5% of the cost of the project before January 1, 2020, the project will qualify for all ITC. According to the actual work test rules, developers must indicate that the actual work of the project has started and continues until the end of the project.

5% the safety port rules also include the continuity requirements, but this can be achieved by "paying extra amount of the cost of the energy and property, signing a binding written contract for additional property or work, obtaining the necessary license and execution". According to the memorandum issued by BakerBotts, this is a significant physical labor.

In a memorandum, the company also said, "a continuous safe harbor will in particular help to find taxpayers who maximize the amount of ITC".

Although it is not clear, it seems that the developer is likely to take the cost of a solar project and provide all the equipment for the project, except for components. Many of them will impose tariffs on them by 2021. By delivering solar modules in 2022, a smart solar developer can still enjoy a full 30% tax relief.