Incentives

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Enterprise Development

Aquaculture Development and Enhancement Programme (ADEP):

The ADEP offers a cash incentive of up to R30 million on investment in marine and freshwater activities such as cultivation and processing, and ancillary activities such as feed manufacturing, research and development, aquaponics and veterinary services. 

 

Automotive Production and Development Programme (APDP):

Automotive Investment Scheme (AIS)

The AIS is part of the Automotive Production and Development Programme (APDP) and aims to grow and develop the automotive sector via investment in new and/or replacement of light motor vehicle models and the manufacturing of automotive components. A cash incentive of 20-35% is payable against a qualifying investment in plant and machinery, tooling, owned buildings and certain competitive improvement costs for Light Motor Vehicle (LMV) Manufacturers, Component Manufacturers and Tooling Companies.

 

People-Carrier Automotive Investment Scheme (P-AIS)

P-AIS is a sub-component of the AIS, designed to stimulate growth in people-carrier vehicles via investment in new and/or replacement models, with a cash incentive of 20 - 35% payable against the qualifying investment in plant and machinery, owned buildings and tooling, process and certain competitive improvement costs for People Carrier Manufacturers / Assemblers and Component Manufacturers and Tooling Companies.

 

Medium-Heavy Commercial Vehicle Automotive Investment Scheme (MHCV-AIS)

MHCV-AIS is a sub-component of the AIS, designed to stimulate growth in medium & heavy vehicles and buses via investment in new and/or replacement models, with a cash incentive of 20 - 35% payable against the qualifying investment in plant and machinery, owned buildings and tooling, process and certain competitive improvement costs for Medium and Commercial Vehicle Manufacturers / Assemblers, Bus Body Builders and Component Manufacturers and Tooling Companies. 

 

Black Industrialist Scheme (BIS):

The BIS supports manufacturing businesses with more than 50% Black shareholding and majority Black Management Control, which intends to make an investment of at least R 30 million. The programme provides assistance with:

  • Capital Investments;
  • Post-investment Support;
  • Feasibility Studies;
  • Business Development Services.

The scale of benefit is between 30% - 50% and is dependent on the percentage of Black shareholding and compliance with designated Economic Benefit Criteria.

 

 Capital Projects Feasibility Programme (CPFP):

The CPFP is a cost-sharing incentive that assists with the cost of feasibility studies likely to lead to projects that will increase export and stimulate the SA market for capital goods and services.  The benefit is capped at R 8 million, to a maximum of 50 % of the total costs of the feasibility studies for projects outside Africa and 55 % for projects in Africa.

 

Co-operative Incentive Scheme (CIS):

The CIS is a 100 % incentive for registered primary co-operatives (where there are 5 or more members).  The objective is to improve the competitiveness of co-operatives by lowering the cost of doing business through incentive support.  Qualifying costs that could attract the CIS incentive includes business development services, technological improvements, machinery & equipment, commercial vehicles, infrastructure linked to the project and working capital.

 

Critical Infrastructure Programme (CIP):

The CIP aims to support infrastructure that is deemed critical to stimulate growth.  The cost-sharing incentive is available if the infrastructure is deemed critical to the investment, where the investment would not take place without the infrastructure or if it could not operate optimally.  The incentive ranges from 10 – 30 % of the total qualifying infrastructure development costs, up to a maximum of R 50 million, dependant on the achieved Economic Benefit Criteria score.  Certain industry sectors could receive an incentive of 10 – 50 % (e.g. agro-processing, state-owned aerospace and national defence national strategic testing facilities, projects that alleviate water and / electricity dependency on the national grid), whilst distressed municipalities and state-owned industrial parks could offer a maximum incentive of up to 100 %, up to a maximum of R 50 million.

 

Enterprise Incubation Programme (EIP):

The EIP was created by the Department of Small Business Development (DSBD), with the objective to support establishment of new incubators and to grow existing incubators.  2016/2017 financial year will be the pilot year, with an expected incentive of 100 % (from R 5 million to R 10 million) up to 3 years, dependant on sector, activities, development needs and subject to availability of funds.  Qualifying costs include business development support, market development, machinery & equipment, infrastructure linked to incubator activities, product and service development, ICT costs and operational costs.

 

Incubation Support Programme (ISP):

The ISP provides support for companies investing in the establishment or expansion of business incubators and is administered by the dti. The benefit is a cost-sharing cash incentive calculated on the operational costs of the incubator over a 2 or 3 year period. The cost-share is either 50:50 or 60:40, to a maximum of R10 million per annum, depending on the size of the incubator.

 

Manufacturing Competitiveness Enhancement Programme (MCEP):  Working Capital and Asset Facility:

Due to reflows of the Industrial Financing loan facility, a decision was taken to re-open the pre and post-dispatch working capital loan facility from September 2016 for another window of applications.  The loans will be limited to R50 million per qualifying manufacturer, at a fixed rate of 4 % per annum.   The working capital loan facility was previously only available to existing businesses with 1 – 2 years of financial history.  

 

The IDC will now also provide funding of up to R50 million for plant and equipment to all qualifying start-up and existing Black Industrialists businesses at the 4 % fixed rate per annum, payable over a period of 7 years.

 

In the interim the dti is continuing discussions with National Treasury for additional investment support for the manufacturing sector.  We will keep you informed should any details be made available.

  

Manufacturing Competitiveness Enhancement Programme (MCEP):  Production Incentive – Programme Suspended:

The dti announced the early suspension of the MCEP in October 2015 with effect from 1 November 2015. The announcement included that a further pronouncement of the future can be expected in April 2016 from the dti.

The programme supports SA’s manufacturing industry and a variety of engineering support services with the objective to improve competitiveness and sustain employment. The cash incentive was available to existing businesses wishing to expand or improve their facilities, products or processes.  The incentive is capped as follows:

  • Capital Investment: 30 - 50% incentive, limited to a maximum of R30 million for large companies.
  • Green Technology and Resource Efficiency Improvement: 30 - 50% incentive, limited to a maximum of R20 million for large companies.
  • Enterprise-Level Competitiveness Improvement: 50 - 70% incentive, limited to a maximum of R10 million for large companies
  • Feasibility studies:  50 - 70% incentive, limited to a maximum of R8 million for large companies.

 

Section 12 I:  Tax Allowance Incentive (12I TAI):

The Section 12 I programme supports large-scale Greenfield investments (with a minimum investment of R50 million) and expansions or upgrades for Brownfield investments (with a minimum investment of R30 million) in manufacturing, with a maximum tax allowance of up to R900 million per project for Greenfield projects located in a Special Economic Zone (SEZ).

 

Research and Development 

Section 11 D:  Research and Development (11 D:  R&D):

The section 11 D Research and Development Incentives allows a deduction equal to 150 % of expenditure incurred directly for Research and Development and provides an accelerated depreciation deduction of 50:30:20 for capital expenditure incurred on machinery used for R&D.  The incentive is managed by the Department of Science and Technology, and they are supported by representatives from National Treasury and SARS to form the Adjudication Committee.

 

Support Programme for Industrial Innovation (SPII):

SPII is designed to promote technology development in SA and provides two schemes:

  • SPII Product Process Development (PPD) scheme:  financial assistance to small, very small and micro-enterprises and individuals in the form of a non-repayable incentive of between 50 – 85 % of the qualifying costs, dependant on the BEE ownership and limited to a maximum of R 2 million
  • SPII Matching scheme:  financial assistance to all enterprises and individuals in the form of a non-repayable incentive of between 50 – 75 % of the qualifying costs, dependant on the BEE ownership and limited to a maximum of R 5 million

Qualifying costs include:

  • Personnel Related Costs;
  • Travel Expenses (defined maximum);
  • Direct Material;
  • Capital Items and Tooling;
  • Software (not general software);
  • Documentation;
  • Testing and Trials;
  • Licensing Costs;
  • Quality Assurance and Certification;
  • Patent Costs; and
  • Subcontracting and Consulting.

 

Technology and Human Resource for Industry Programme (THRIP):

THRIP is intended to assist with partnerships between government and industry for research and development in science, engineering and technology on a cost-sharing basis, in order to produce skilled resources and to improve competitiveness in the industry.  The cost-sharing incentive is limited to R 8 million per year for 3 years and a variety of qualifying costs could be considered.

 

Competitiveness 

Section 12 L:  Energy Efficiency Tax Incentive (12 L):

The section 12 L of the Income Tax Act (as amended) came into operation in November 2013.  These tax incentives were introduced to incentivise businesses to prove measurable energy savings.  The amended tax relief is 95 cents deduction in taxable income per kilowatt hour of energy saved, subject to regulations being met.

 Textile Production Incentive Programme (PIP):

The PIP aims to develop the clothing, textiles, footwear, leather and leather goods manufacturing sectors and is calculated at a % of the company’s Manufacturing Value Addition (MVA). The cash incentive may be used to improve competitiveness, invest in capital equipment, improve products or processes and develop skills. The incentive benefit is equal to 7,5 % of a company’s Manufacturing Value Add (MVA).

 

 Export

 Export Marketing and Investment Assistance Scheme (EMIA):

The EMIA scheme develops export markets for SA products and services by providing assistance with the following:

  • Individual Exhibition Participation (including transport of samples, rental of exhibition space, subsistence allowance, return economy-class airfare and exhibition fees up to a maximum of R 45,000)
  • Primary Market Research and Foreign Direct Investment (including return economy-class airfare, subsistence allowance per day, transport of samples and marketing material)
  • Individual Inward Missions (including registration of a patent, return economy-class airfare, subsistence allowance and rental of exhibition space)

 

Special Economic Zone (SEZ):

The purpose of the SEZ programme is to expand strategic industrialisation to cover regional development and to provide a framework for the development of more SEZ’s.  The geographical designated areas aim to ensure SEZ growth, revenue generation, job creation, attraction of Foreign Direct Investment and competitiveness on an international scale.  The following is a summary of the expected benefits:

  • 15 % Corporate tax
  • Building allowance
  • Employment incentive
  • Customs Controlled Area