R& D Tax Incentives

[Blurock]

I wonder how many companies are making use of the incentives available from government.

South Africans are great innovators as evidenced by the first heart transplant, ISCOR and SASOL, our previous uranium enrichment programs etc etc. The list is just too long. What is stopping us?

This type of tax break may just make it possible to invest more in R & D and still get a proper return on your investment. On the upside, the new innovation may give us a leading edge against our competitors or replace expensive imports.

Companies undertaking scientific and technological research and development (R&D) in South Africa can qualify for a 150% tax deduction for operational R&D expenditure in terms of section 11D of the Income Tax Act.This incentive is available to businesses of all sizes and in all sectors of the economy as long as they are registered in South Africa. To qualify for the deduction, the R&D activities against which the expenditure is incurred must be approved by the Minister of Science and Technology.

The incentive is aimed at encouraging businesses to invest in R&D in South Africa. The objective is to help companies build capabilities and innovations by creating new products, processes, devices and techniques, and/or significantly improving existing ones. This incentive is part of a package of measures that the government of South Africa has introduced to support R&D-led innovation, industrial development and employment creation.


Application process

To access the incentive, a company must complete an application form (www.dst.gov.za/r-d) and submit it to the Department of Science and Technology (DST), which is responsible for the administration of the process. DST officials can provide information and assistance regarding completing the application form.

It is important to submit the application before starting to conduct the R&D in question because only expenditure incurred on or after the date on which the DST receives the application will be considered for the incentive.


For more information, please contact Ms Dimakatso Mokone at +27 12 843 6560 /

012 843 6829 or e-mail dimakatso.mokone@dst.gov.za.