227 companies receive R&D tax incentive
08 September 2015
Posted by: Author: Simnikiwe Mzekandaba
Author: Simnikiwe Mzekandaba (IT Web)
Some 227 South African companies have been granted approval for government's research and development (R&D) tax incentive this year.
This is the word from the Department of Science and Technology (DST), which says of the 876 companies that applied for the tax incentive, 227 have been approved.
However, the DST would not reveal the names of the companies granted the tax incentive. "The DST does not disclose names of companies that take part in the incentive. This is restricted in terms of the Income Tax Act."
The R&D tax incentive falls under section 11D of SA's Income Tax Act, and aims to encourage South African companies to invest in science and technology R&D in the country.
Under the terms of the tax incentive, companies are allowed a 150% tax deduction for R&D expenses, as well as accelerated depreciation deduction for capital expenditure on machinery used, according to the South African Revenue Service (SARS).
The DST notes there is no limit to the number of companies that can receive the incentive, and any company that has been granted an approval can claim the R&D tax deduction from SARS.
"The companies that were approved for the tax incentive satisfied all requirements set out in the Income Tax Act for R&D incentives," says the department.
In order to be eligible for the incentive, a company must be involved in scientific and/or technological R&D activities in the country and the R&D activities must be approved by the minister.
The incentive is available to businesses of all sizes and in all sectors of the economy, as long as they are registered in South Africa and are involved in scientific and technological R&D.
DST minister Naledi Pandor says: "At a company level, the incentive helps to reduce the after-tax price of R&D, creating an incentive for the company to increase its investment in R&D. Through undertaking R&D, domestic companies can enhance their competitiveness by developing new products, processes and services."
The DST says government aims to double investment in R&D from the current level of 0.76% (R24 billion) of gross domestic product, to 1.5% by 2019.
This article first appeared on itweb.co.za.