Editor's Choice

R&D tax incentive applications streamlined

21 March 2018 Editor's Choice News

The South African government has reduced the red tape required for companies to apply for a research and development (R&D) incentive, by reducing the turnaround time to 90 days.

This follows the establishment of a task team by the minister of science and technology in 2015 to address bottlenecks experienced by businesses accessing the incentive, and includes measures such as simplifying documentation and application processes and improving guidance provided to firms on how the incentive works.

The programme, which was established in 2006 as an instrument to stimulate private sector investment in R&D and innovation, has been beset with several challenges including administrative delays, complex information and limited access for small and medium enterprises and startups, hindering the private sector’s response to the programme that offers tax breaks through the South African Revenue Services (SARS) to companies investing in R&D.

In a breakfast seminar held with the private sector in Pretoria on the 2nd of March, the department of science and technology’s (DST) chief director for science and technology investment, Godfrey Mashamba, announced that government has implemented the recommendations made by the task team. The task team findings and recommendations covered a range of issues dealing with both the measures to simplify administrative processes and the policy-related matters.

“An online system of submitting applications was implemented. Besides eliminating the paper-based forms, this system should improve information management and decision turnaround times,” said Mashamba. Through this online system, applicants can now register, complete an application, and immediately receive acknowledgement. They can also track progress towards a decision, and in the future will be able to submit progress reports on approved R&D.

The DST says much progress has already been made in processing applications, citing that between October 2012 and the end of February 2018, 1212 (95%) of the valid applications received were adjudicated and 1054 (82,5%) received decisions on their applications. In addition, the number of small businesses applying to the programme increased to almost 480 this past financial year, compared to only 331 in 2014/15.

On the downside, Ms Hayley Reynolds from the national treasury indicated that it was not feasible to increase the tax deduction rate to 150% and to introduce a refundable tax credit to support SMEs, which she said would increase cost to the fiscus.

Speaking for the first time as minister of science and technology, Mmamoloko Kubayi-Ngubane said companies of any size, in any industry, could qualify for the tax incentive. “At a corporate tax rate of 28%, the incentive benefit translates into a benefit of 14 cents per Rand spent on R&D, thus reducing the marginal cost of R&D. That gesture is a reflection of the extent to which government is committed to promoting a conducive environment for business to operate,” she said.

The minister urged the business sector to take advantage of the incentive and invest more in R&D, and said one major challenge was that gross expenditure on R&D (GERD) as a percentage of the GDP remained below 1%. “That reflects an underperformance relative to our own policy targets and some comparable economies, which have gross expenditure on research and development to GDP ratio (GERD)/GDP of around 2%,” she said.

For more information visit www.dst.gov.za

Share this article:
Share via emailShare via LinkedInPrint this page

Further reading:

Why you don’t take ‘touch’ for granted
30 September 2020 , Editor's Choice
The key criteria for choosing the right sensor control IC          Touch has become an incredibly intuitive way for people to interact with high-tech devices. In just a few short years after the first ...

Ask your PCB supplier about reliability, not just capability
28 October 2020, Elmatica , Editor's Choice, Manufacturing / Production Technology, Hardware & Services
Make sure to discuss combinations and how your solution affects risk of failure with the multiple heat cycles required to assemble the product, and the risk of failure in the final application.

How you can help your EMS partner
28 October 2020, Jemstech , Editor's Choice, Manufacturing / Production Technology, Hardware & Services
If you want a good quality, reasonably priced product in a quick turnaround time, always communicate your assembly requirements effectively with your EMS partner.

Practical experience with PCB robotic soldering processes
28 October 2020 , Editor's Choice, Manufacturing / Production Technology, Hardware & Services
Over the past few years there has been a lot of discussion over the need for higher temperature materials and expanding the use and knowledge of high temperature assembly techniques.

TRX welcomes Hannes Taute as new MD
28 October 2020, TRX Electronics , Editor's Choice, News
We delve into his background, what his plans for TRX Electronics are, and how he envisions what the future of the local electronics industry will look like.

Personality profile: Hosia Matlou
28 October 2020 , Editor's Choice
“To make a success in the very niche electronics manufacturing market, I believe it’s important to have experience in both engineering and business management.”

Stability in turbulent times
28 October 2020, Omnigo , Editor's Choice
Omnigo’s Pieter de Nysschen discusses the importance of staying positive and motivated during these hard times when the whole world seems to have been turned upside down.

Women taking the lead in engineering
31 August 2020 , Editor's Choice, News
Alaris Antennas is an engineering company specialising in the design and production of (often) customised antennas for electronic warfare. This is not an industry that typically attracts women to steer ...

Smoke detection matters
30 September 2020, Altron Arrow , Editor's Choice, Analogue, Mixed Signal, LSI
Smoke detection regulations are critically important when the value proposition is as basic as human life itself.

Personality profile: Mervyn Stocks
30 September 2020, Denver Technical Products , Editor's Choice
Mervyn Stocks, the founder and MD of Denver Technical Products, started his career as a learner technician, worked at some well-known companies in the industry before setting out on his own.