South Africa’s Tax Fueled Expansion

November 9, 2010 Taxation in South Africa

the not-so-impossible dreamThe South African Government has initiated a ZAR 6.5 billion (approx. USD 945.2 million) tax allowance program, in the hopes of greatly boosting the national manufacturing sector and supporting the training for low skilled employees.

On November 8th the South African Minister of Trade and Industry Rob Davies announced an ambitious new government project which will grant a range of tax allowances to national firms introducing and utilizing new or innovative manufacturing processes, or improving energy efficiency and reducing production waste technologies.

The new program grants tax allowances to companies based on the nature of their work, and the number of staff that will receive training by the company. The exact tax allowance figure granted to companies will also be affected by the the number of jobs they create, the entailed employment skill development, and location of the enterprise. Firms engaged in creating new industrial projects which utilize unused manufacturing assets are eligible to receive up to ZAR 900 million (approx. USD 131.15 million) in tax allowances. Industrial upgrade programs and expansions will be able to claim a maximum of ZAR 550 million (approx. USD 80.15 million). Additionally, companies will be able to claim a further ZAR 36 000 (approx. USD 5 245) per employee that will receive job-skill training.

The incentive project is scheduled to run until December 31st 2015. According to statements made by Rob Davies, the members selection committee have not all been selected, but the choice will be finalized soon. So far the committee has received four applications for the tax allowance.

Photo by garden beth