SA INCENTIVE SCHEMES by monkey6

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									                                                SA INCENTIVE SCHEMES



                                               Tax Incentives

       Title                 Objective                      Applicable to                Nature of benefit
Preferential rate    Support small business         Companies and Close             First R100000 of taxable
for small business   development and job            Corporations with gross         income is taxed at a
corporations         creation                       revenue less than R3 million    reduced rate of 15%
Research and         Stimulate scientific           Scientific research operating   25% of cost of
Development          research                       expenditure and approved        [approved] capital
                                                    capital expenditure             expenditure for scientific
                                                                                    research can be deducted
                                                                                    annually.
Employee             Promote employee               Erection of houses for          50% of actual
Housing              housing                        employees, or amounts           expenditure or donation
                                                    donated for such purpose        [maximum R6000]
Depreciation         Stimulate investment in        Plant and machinery,            Generally 20% per
                     assets                         buildings, and non-             annum on plant and
                                                    manufacturing fixed assets      machinery, 5% on
                                                                                    buildings, and between
                                                                                    10% and 33.33% on non-
                                                                                    manufacturing fixed
                                                                                    assets. With effect from
                                                                                    1 March 2002,
                                                                                    manufacturing assets can
                                                                                    be depreciated by 40% in
                                                                                    first year and 20% in
                                                                                    subsequent years
Training             Encourage employers to         All employers offering          R25 000 deduction on
                     undertake training of          approved learnerships           signature of the
                     employees                      equivalent to 1 level of the    learnership agreement
                                                    National Qualifications         and a further R25 000 on
                                                    framework to their              successful completion of
                                                    employees with effect from      the learnership
                                                    1 October 2001
Strategic            Encourage investment in        Investments of R50 million      Additional 50 or 100
Investment           larger scale projects          or more that are                percent         allowance
Programme                                           commercially viable, have       [depending on points
                                                    minimal negative impact on      scored] of value of
                                                    existing businesses and do      qualifying assets. Points
                                                    not benefit from certain        are scored for extent to
                                                    other incentives                which they upgrade the
                                                                                    industry, build linkages
                                                                                    with smaller businesses,
                                                                                    and create employment


                                            Finance Incentives

      Title                   Objective                    Applicable to                Nature of benefit
Agro-industries      Development of                 Minimum financing               Competitive, risk-related
Development          agricultural, marine, food     requirement of R1 million       interest rate
Finance              and beverage sectors           on approved business plans
Bridging Finance     Short-term finance to firms    Minimum financing               Competitive, risk-related
                     with secured contracts with    requirement of R500 000         interest rate
                     government and private         and turnover of more than
                     sector                         R1 million, and secured
                                                    contracts
Entrepreneurial      Development of small and       Minimum financing               Medium term financing
Mining and           medium mining and              requirement of R1 million
Beneficiation        beneficiation activities and   on approved business plans
Finance              jewellery manufacturing

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                                            Finance Incentives

      Title                  Objective                    Applicable to              Nature of benefit
Empowerment         Assistance to emerging         Business must be acquired       Medium term financing
Finance             industrialists/entrepreneurs   as a going concern.
                    to acquire a stake in formal   Finance requirement
                    businesses                     between R1 million and
                                                   R100 million. 10% of
                                                   purchase price cash
                                                   contribution from
                                                   entrepreneur
Finance for the     Development of the             Meaningful financial            Medium term finance
Expansion of the    manufacturing sector           contribution from
Manufacturing                                      promoters and minimum
Sector                                             financing requirement of
                                                   R1 million
Finance for         Development and                Meaningful financial            Medium term finance
Textiles,           expansion of sectors           contribution from
Clothing, Leather                                  promoters and minimum
and Footwear                                       financing requirement of
Industries                                         R500 000
Export Finance      Facilitate export of capital   Industrialists and exporters    Credit facilities for
                    goods and services                                             capital goods and
                                                                                   services exported from
                                                                                   South Africa
Import Finance      Improve credit position of     Industrialists and importers    Medium to long-term
                    local importers                                                import credit facilities
Techno-industry     Development of the             IT, telecommunications,         Equity and loan finance
Development         information technology,        electronic and electrical       for techno-businesses
Finance             telecommunications,            industries
                    electronic and electrical
                    industries
Tourism             Tourism industry               Tourism industry                Medium term finance
Development         development                                                    for creation of new
Finance                                                                            facilities and upgrading
                                                                                   of existing tourism
                                                                                   facilities
Wholesale           Wholesale funding to           Proven track record.            Medium-term loans at
Finance             intermediaries                 Training and mentorship         competitive interest
                                                   programme. Must require a       rates
                                                   minimum of R1 million for
                                                   the financing for at least 10
                                                   projects


                                Research and Development Incentives

      Title                 Objective                     Applicable to                Nature of benefit
Support             Development of local           All private sector              Grant of 50% of direct of
Programme for       innovative products or         enterprises                     pre-competitive
Industrial          processes in manufacturing                                     development costs to
Innovation          and IT sectors                                                 maximum of R1.5
                                                                                   million
Partnership in      Stimulate industrial           Private sector companies in     Matching grants of up to
Industrial          research and innovation in     manufacturing and IT            50% if pre-competitive
Innovation          technological development      sectors                         development expenditure
                    of products or processes                                       exceeds R3 million.
                    with high market potential                                     Payback mechanism for
                                                                                   successful projects
Technology for      Enhance South African          Companies collaborating         Matching grant.
Human Resource      industry’s competitiveness     with educational                Contributes R1 for every
for Industry                                       institutions involved in        R2 invested by a
Programme                                          training                        company in research
                                                                                   projects
                                                       2
Innovation Fund     Promote technological        Companies undertaking          Grants of between R1
                    innovation in research       research in IT,                million and R5 million
                    community and cross-         biotechnology, and valued      for maximum of 3 years
                    sectoral collaboration       added processes


                                         Export Facilitation

      Title                  Objective                 Applicable to                Nature of benefit
Export Marketing    Promote South African        Registered exporters           Portion of specified
and Investment      exports and inward                                          market research and
Assistance          investment                                                  export promotion
                                                                                expenses
International       Partially compensate         Businesses that are            Reimbursement of
Tourism             companies for costs          registered members of an       portions of specific costs
Marketing           incurred in the promotion    official tourism trade         relating to marketing and
Assistance          of tourism to South Africa   organisation                   outward selling
Scheme
Steel Rebates and   Promotion of beneficiated    Exporters of fabricated        Rebates based on value
Concessions         South African steel          steel products with at least   of exports
                    product exports              25% value-added.
Customs Rebate      Promotion of                 All manufacturers and          Rebate or drawback of
and Drawback        manufactured goods           exporters                      customs duties on
Provisions          exports                                                     imported inputs
Industrial          Promote manufacturing        Manufacturers and              Drawback of customs
Development         and increase                 exporters in designated        duties on imported
Zones               competitiveness of exports   areas                          inputs, raw materials and
                                                                                components
Value Added Tax     Encourage exports and        Exporters registered as        Exports zero-rated for
Export Incentive    inward investment            VAT vendors                    VAT purposes
Scheme
Duty Credit         Increased exports of         Exporters of specified         Duty Credit Certificates
Certificate         certain textiles and         textiles and clothing
Scheme              clothing
Motor Industry      Increased productivity and   Motor vehicle assemblers       Import Rebate Credit
Development         competitiveness of motor     and component                  Certificates based on
Programme           industry sector              manufacturers                  export performance and
[MIDP]                                                                          duty free allowance to
                                                                                motor vehicle assemblers
MIDP Productive     Encourage manufacturers      Motor vehicle assemblers       20% of value of
Asset Allowance     of specified light motor     and associated component       productive assets spread
                    vehicles to rationalize      manufacturers                  equally over 5 years
                    model ranges                                                applied against import
                                                                                duties



                                 Enterprise Development Incentives

      Title                  Objective                  Applicable to               Nature of benefit
Small Medium        Promote investment in        Enterprises investing up to    2 year cash incentive
Enterprise          small and medium             R100 million in new            ranging from 10% to 1%
Development         enterprises                  projects or expansions         of the value of qualifying
Programme                                                                       assets. 3rd year bonus for
[SMEDP] –                                                                       meeting labour
Manufacturing                                                                   requirements
Small Medium        Encourage investment in      Enterprises in new, or         2 year cash incentive on
Enterprise          the tourism industry         expansion of existing          qualifying assets ranging
Development                                      projects for short-term        from 10% downwards
Programme -                                      accommodation, tour            depending on scale of
Tourism                                          operators, Funicular           investment
                                                 Railway and water
                                                 transport
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                                  Enterprise Development Incentives

      Title                  Objective                     Applicable to              Nature of benefit
Foreign              Encourage inward              Foreign investors importing   Grant to cover part of the
Investment Grant     investment in capital         capital equipment into        transport costs related to
                     equipment                     South Africa                  the imported equipment
Strategic            Encourage strategic           Manufacturing operations      Additional capital
Investment           investment in productive      classed as “strategic” by     allowances of 50% or
Programme            assets                        Department of Trade and       100% capitalised within
                                                   Industry                      first year
Skills Support       Assist new and expanding      New or expanding              50% of eligible training
Programme            companies to cover            enterprises qualifying for    costs not exceeding 30%
                     training costs                SMEDP [above] providing       of annual wage bill
                                                   approved training
Critical             Encourage infrastructure      New or expanding              Between 10% and 30%
Infrastructure       development                   enterprises or                of total capital costs are
Programme                                          municipalities investing in   supported
                                                   excess of R100 million in
                                                   infrastructure


                               Competitiveness-Enhancement Incentives

     Title                   Objective                   Applicable to               Nature of benefit
Competitive-ness     Assist South African          All South African private     50% reimbursable grant
Fund                 companies to become more      companies                     with R600 000 limit per
                     competitive                                                 legal entity. Grant to
                                                                                 cover costs of service
                                                                                 providers engaged in
                                                                                 competitiveness
                                                                                 enhancement
Sector Partnership   Promote productivity and      Partnerships amongst 5 or     65% of costs of technical
Fund                 competitiveness               more companies with a         and marketing
                                                   qualifying programme          programmes limited to
                                                                                 R1 million
Sources: Department of Trade and Industry, Department of Finance and Deloitte & Touche




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