The 12I Tax Incentive is designed to enable manufacturing businesses to benefit from a tax incentive for selective capital investments and training. The following types of manufacturing businesses can benefit from this incentive which is available until 31 December 2017: Please read the guidelines to see the types of businesses classified under the 3rd and 7th edition.
Businesses are able to deduct the following amounts from their taxable income Investment Allowance as show below:
The amount of tax deductions is determined by the points status of your business. A brief summary of how points are allocated is shown below. For a detailed understanding of how this point system works, please download the guidelines. This document outlines the types of projects that will be supported by this incentive.
Visit the DTI website to download the application forms and guidelines.
The incentive is available to South African businesses, Higher Education Institutions and Research Institutions to purchase machinery, equipment, bulk infrastructure, leasehold improvements or improvements that will enhance the competitiveness of the project. The incentive finance covers 30% to 45% of the required finance but may not exceed R 40 million. Note that this is a reimbursable fund which means you have to pay for the goods or services first and then claim the appropriate amount back from the ADEP fund.
Eligible projects include:
The Business Process Services (BPS) Incentive is primarily geared towards creating employment in the call center or offshoring sector in South Africa and is available to small businesses as well. This incentive is available from 1 October 2014 until 31 March 2019.
The dti will determine whether a business, which must be a legally registered entity, is eligible to benefit from the BPS incentive, based on the following criteria.
The total costs of the production will determine the amount of the incentive but in general it ranges from 20% to 25% of the Qualifying South African Production Expenditure (QSAPE) and the Qualifying South African Post-Production Expenditure (QSAPPE). To understand which costs the incentive can be used for, you would need to download the guidelines (they provide a detailed explanation of QSAPE and QSAPPE).
Eligible enterprises should have a QSAPE of R12 million with at least 50% of the principal photography occurring in South Africa for at least 4 weeks. The QSAPPE should be R1.5 million or more, with 100% of the post-production work being conducted in South Africa for a minimum of two weeks.
You will have to register a special purpose corporate vehicle (company set up specifically for the duration of the project) - this company must be registered in South Africa.
Please visit the dti website to download application forms and find out more details on how to apply. It is important to read through the guidelines before submitting an application as there are many restrictions and processes that you will need to take into account. You may contact the fund manager once you have read through the guidelines, should you require clarification on any of the items.
Newsflash published 29th October 2015 : The Department of Trade and Industry (the dti) is temporarily suspending new applications for the Manufacturing Competitiveness Enhancement Programme (MCEP) with immediate effect.
This is a cost-sharing incentive designed to promote enterprise competitiveness and job retention in the manufacturing sector.
The total amount of the grant is based on the size of the company applying and is calculated either as a percentage of their average manufacturing value-added (MVA) over 2 years or, in the case of a company with total assets valued at less than R5 million, as a cost sharing based on the investment they have made.
The MCEP provides incentives to build the competitiveness of the manufacturing sector. There are two options that can be applied for:
Please note that with effect from 11 May 2015, all new applications with an investment value of R50 million and above, will no longer be considered under the Manufacturing Competitiveness Enhancement Programme (MCEP) Incentive. Applicants with an investment value of R50 million and above are encouraged to apply for the 12I Tax Allowance Incentive.
This is a cost-sharing incentive (varying from between 10% to 25% of the cost) for manufacturing where the total cost of the required investment does not exceed R50 million. The funds are divided into the following areas and most of these have their own application process and investment requirements:
Industrial Financing Loan Facilities
Projects identified by the dti sector desks and IDC’s strategic business units that focus on new areas with potential for job creation, diversification of manufacturing output and contribution to exports, that would otherwise not be candidates for commercial or IDC funding, may be eligible for an MCEP grant that may be structured as part of the borrower’s equity contribution.
Note: The Working Capital and the Distress Funding Facilities are loan products that will be managed by the IDC.
The incentive grant can be invested in capital equipment for upgrading and expansions; green technology upgrades for cleaner production and resource efficiency activities; enterprise-level competitiveness improvement activities for new or increased market access, product and process improvement and related skills development; as well as conducting feasibility studies.
Please visit the dti website to download application forms and find out more details on how to apply. It is important to read through the guidelines before submitting an application as there are many restrictions and processes that you will need to take into account. Please note that if you are already receiving other government incentives, you may not be eligible to apply for this incentive.
This incentive fund is available for local, BEE producers to assist them to take on big productions such as:
Note that reality TV, discussion programmes, current affairs, news, advertising programmes and commercials, panel programmes, public events, soapies, training or “how to” programmes and cell phone video gaming are not eligible for funding.
The fund provides a rebate of up to 50% for the first R 6 million of the Qualifying South African Production Expenditure (QSAPE) and a further 25% thereafter is available subject to conditions set out in the guidelines document. The QSAPE should constitute at least 75% of the total budget. The monies are paid out at set milestones listed below:
You would need to register a separate legal company that will be used specifically for this production (this is called a Special Purpose Corporate Vehicle or SPCV). The SPCV must have at least 75% South African black shareholders and the holding company of the SPCV is expected to have at least 65% South African black shareholders. Both the SPCV and the holding company must submit a B-BBEE certificate of at least level 3.
It is important that principal photography should not start until an approval letter has been received from the Department of Trade and Industry.
The International Tourism Marketing Assistance Scheme (ITMAS) provides partial compensation to businesses for certain costs incurred in respect of activities aimed at promoting tourism to South Africa. Emerging companies can claim up to R15 000 for marketing material whilst non-emerging businesses may claim up to R8 000. Financial assistance is also available to help with the cost of the stands and varies according to the status of the business applying for the assistance. Applications have to be made at least two months in advance. The following items can be financed:
The priority overseas exhibitions that the scheme will sponsor are:
For other exhibitions, applicants have to provide a detailed profile of the fair they wish to attend. The following will be considered when assessing the applications:
In order to qualify for participation in the schemes, businesses must:
The comprehensive application instructions can be read here.
The purpose of the International Market Access Support Programme is to broaden and facilitate strategic and coordinated access to export markets by partially subsidising the cost of exhibiting at international exhibitions and marketing roadshows. The subsidies are available to SMMEs that provide accommodation, tour operators, attractions and experience providers.
Costs that will be subsidised are:
Note: The Department decides the percentage of the subsidisation and each business may apply up to 3 times during a five-year period. The rates applied to airfare and accommodation subsidies are as follows:
Familiarise yourself with the programme guidelines. Once the Department has published a list of predetermined international exhibitions and roadshows, it issues a Call for Application. Complete the online Application Form, save and submit it to firstname.lastname@example.org.
The purpose of the Tourism Grading Support Programme is to encourage wider participation in the Tourism Grading System by reducing the cost of grading for small and medium-sized accommodation and MESE businesses.
You have to first apply and pay for the grading and once successful, you can claim one of the following rebates. Applicants who have been awarded star grading by the TGCSA with effect from January 2015 are eligible to apply for the rebate. The following rebates are offered:
Application process:Familiarise yourself with the programme guidelines. Once the Department has published a list of predetermined international exhibitions and roadshows, it issues a Call for Application. Complete the online Application Form, save and submit it to email@example.com.
Finfind provides its services free of charge to businesses seeking finance. Our primary purpose is to link SMEs with all the relevant finance providers and finance products that match their funding needs. As a matching service we are not required to be a registered finance provider as we do not loan money directly.