Programmes

African Growth and Opportunity Act (AGOA)

Qualifying South African exports to the United States, duty free. Defined listing of qualifying products has been established.

Automotive Incentive Scheme (AIS)

A taxable cash incentive whereby Original Equipment Manufacturers (OEM) or component manufactures may recover between 20% and 30% of the qualifying investment in Plant and Equipment and Buildings. Incentive is claimed over a three year period.

Black Business Supplier Development Programme (BBSDP)

Majority black owned business with a turnover of R250 000 or less may qualify. Benefit is limited to R100 000 calculated against costs incurred to improve competitiveness of the company.

Business Process Services Incentive Programme (BPS)

A taxable incentive available to companies engaged in BPS activities. Available to new and existing operations where a minimum of 50 new South African employment opportunities are created. Incentive is paid over a three year term. Incentive benefit per employee is calculated at R40 000 per year for years ending 2012 and 2013 with a further benefit of R32 000 for years ending 2014 and 2015 and R24 000 for years ending 2016. Additional benefits are available to companies employing in excess of 400 employees and further benefits where new employment opportunities exceed 800.

Clothing and Textile Competitiveness Improvement Programme (CTCIP)

The Programme is available to textile and clothing manufacturers. Incentive benefit comprises of a matching grant of between 65% and 75% of project costs excluding capital costs. A maximum benefit of R2.5 million may be claimed over a period of 5 years.

Co-operative Incentive Scheme

Available to South African registerd co-operatives. Provides for a cost sharing grant to a maximum of R300 000 in respect of expenditure incurred in business development activities aimed at enhancing the competitiveness of the operation.

Critical Infrastructure Programme

Programme aimed at municipalities and private enterprise engaged in infrastructure projects benefitting community. Qualifying projects include Electrical supply, water distribution, public roads, railways and sewerage systems. Benefit of between 10% and 30% of the infrastructure cost may be recovered.

Enterprise Investment Programme (EIP)

Also see MIP and TSP

We help companies receive the maximum tax free cash grant from the Enterprise Investment Programme, which is an incentive grant replacing the Small Medium Enterprise Development Programme. It has two sub programmes with specific industry focus on manufacturing and tourism.

The two sub programmes are the Manufacturing Investment Programme (MIP), and the Tourism Support Programme (TSP). This programme is legislated to run for a six year period ending around July 2014.

Applications under the new incentive programme must be made at least three months prior to the start of production for an establishment or expansion project. Applicants are further required to apply and receive approval for the investment prior to acquiring investment assets.

The benefits are calculated as follows:

Total Qualifying Investment less than R 5 million: The benefit is calculated at 30% over a three year period of the total qualifying investment.
Total Qualifying Investment greater than R 5 million and less than R 200 million: The benefit is calculated on a regressive scale from 30% to 15%over a two year period of the total qualifying investment.
The total benefit is limited to a maximum of R 30 million over the period of the incentive term.
The following broad assets would qualify for incentivisation under the EIP:
Capitalised machinery and equipment
Owned land and buildings
Rented land and buildings – limited to 20% of machinery and equipment qualifying value
Customised commercial vehicles (eg refrigerated trucks)

A Foreign Investment Grant (FIG) is available to foreign owned legal entities applying for benefits under the MIP in order to assist with the costs of relocating machinery and equipment to SA.

The FIG is not available to legal entities applying for TSP benefits. The available benefit under the FIG is calculated at 15% of the qualifying cost limited to a maximum of R 10 million.

Only incorporated legal entities can apply for establishment and expansion investment benefits under both the MIP and TSP. Legal entities in the clothing and textile sector can apply for specific upgrading benefits.

Broad Based Black Economic Empowerment (BBBEE) is a requirement for both the MIP and TSP. BBBEE compliance certificates are required for submission of both applications and claims.

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Export Marketing and Investment Assistance (EMIA)

We assist companies to benefit from the EMIA scheme, the purpose of which is to partially compensate exporters for costs incurred in respect of activities aimed at developing export markets for South African products and services and to recruit new foreign direct investment into South Africa.

Certain costs may be recovered relating to participation in South African national pavilions abroad, outward and inward buying trade missions, including group missions abroad.

Foreign Investment Grant (FIG)

A Foreign Investment Grant (FIG) is available to majority owned foreign companies investing in new South African based operations. Qualifying companies are required to qualify for the Manufacturing Incentive Programme (MIP) in order to qualify for the FIG. Qualifying operations may recover all relocation costs incurred in relocating machinery and equipment to South Africa. The maximum incentive benefit is R10-million and is paid on a re-imbursive basis. The Incentive is tax free.

The FIG is only available to legal entities applying for Manufacturing Investment Programme (MIP) benefits. The available benefit under the FIG is calculated at 15% of the qualifying cost limited to a maximum of R10 million.

Industrial Policy Projects (IPP)

This tax based incentive is governed by Section 12I of the income tax act. Available to manufacturing based companies, new and existing companies may qualify for the additional investment allowance. Qualifying investments comprise of Plant and Machinery. Greenfield operations (new operations) require a minimum qualifying investment of R200 million. For Brownfield operations (expansions) the minimum qualifying investment is the greater of R30 million or 25% growth in existing manufacturing assets. Substantial upgrades constitute investments to replace existing manufacturing equipment with a minimum investment of R30 million required.

The additional tax allowance could amount to between R350 million to R900 million, a tax saving of between R98 million to R252 million. An additional allowance may be claimed against training costs of up to R36 000 per employee.

Location Film and Television Production Rebate

Aimed at foreign based qualifying productions in SA. Minimum SA production expenditure of R12 million required. Qualifying operations qualify for 15% of the qualifying production costs to a maximum of R10 million. Minimum feature length of 90 minutes required.

Manufacturing Incentive programme (MIP)

Part of the EIP

The MIP is available to new or expanding manufacturing operations. A tax free cash incentive may be claimed on qualifying investments of up to R200 million. The incentive benefit is calculated against the qualifying investment in Plant and Equipment, Customised commercial vehicles, land and buildings and / or rented property. Benefits are paid out over a 3 or 2 year term with qualifying investments above R5 million securing the benefit over a 2 year term and investments below R5 million seeing benefits calculated over a 3 year term. (see EIP and FIG)

Productive Asset Allowance (PAA)

We administer the incentive geared towards first tier automotive component manufacturers supplying Original Equipment components to motor vehicle manufacturers. Incentive benefits total 20% of qualifying investment, payable over a five year period in the form of a duty credit certificate to offset import duties on built up vehicle imports.

The incentive was terminated on 31 December 2009. PAA was replaced by the AIS (Automotive Investment Scheme) during May 2010.

Rebates and Duty Draw backs

Available to companies importing goods in a manufacturing process. Duties paid may be recovered where manufactured goods are exported.

SA Film and Television Production and co-production scheme

A maximum rebate of R10 million available to local productions with a minimum production cost of R2.5 million. Benefit is calculated at 35% of the first R6 million with an additional 25% calculated against additional qualifying production costs above R6 million.

Small Medium Enterprise Development Programme (SMEDP)

Although the SMEDP was suspended during 2006, companies who submitted an application before the termination date of 31 August 2007 may still receive incentive benefits.

We assist companies with the administrative requirements of submitting claims and receiving the SMEDP incentive. The SMEDP was replaced by the EIP (Enterprise Investment Programme) (see above) which was launched in July 2008.

Steel Rebates

Rebates provided by steel producers on exported steel components. Participating claimants required to have a 20% value add component in final export price excluding VAT. Benefit is calculated at R135 per ton exported.

Tourism Support Programme (TSP)

Part of the EIP

The TSP is available to new or expanding Tourism based investments. A tax free cash incentive may be claimed on qualifying investments of up to R200 million. The incentive benefit is calculated against the qualifying investment in Buildings, Tourism vehicles and Furniture and Fittings. Rented premises will also qualify for the programme. Benefits are paid out over a 3 or 2 year term with qualifying investments above R5 million securing the benefit over a 2 year term and investments below R5 million seeing benefits calculated over a 3 year term.

Production Incentive

The PI is a market-neutral incentive offered to clothing manufacturers, textile manufacturers, cut, make & trim (CMT) operators, footwear manufacturers, leather goods manufacturing and leather processors. The benefit equals 10% of the manufacturing value add (MVA).

Resources

manufacturing incentives

IQuad Investment Incentives offers services for SMEDP, EIP, PAA, EMIA, IPP and more.