Tax breaks for big investment projects

11 March 2009

The National Treasury has published draft regulations outlining new tax incentives worth R5-billion targeting large industrial investments in South Africa.

The new tax incentives complement the government’s Enterprise Investment Programme, launched in 2008, which offers funding for smaller manufacturing and tourism investments, valued at between R5-million and R200-million.

The incentives target large investment projects, starting at R200-million in the case of greenfield (new) projects and R30-million in the case of brownfield (expansion) projects.

The draft regulations give the requirements for investments to qualify for the tax breaks, strongly favouring projects that promote job creation, skills development and energy efficiency.

Procurement from smaller businesses, innovative processes, business linkages and location in an industrial development zone will also stand in a project’s favour.

Proposed projects that achieve “qualifying status” will be able to deduct from their taxable income 35% of the costs of their investment in manufacturing assets, up to a maximum of R550-million. “Preferred status” projects will be able deduct 55% of the cost of their investment in manufacturing assets, up to a maximum of R900-million.

Projects will also be able to deduct an additional training allowance of R36 000 per employee from their taxable income, up to a maximum of R20-million for “qualifying” projects and R30-million for “preferred” projects.

Members of the public have until 31 March 2009 to comment on the draft regulations, which are available on the National Treasury website

Comments should be sent to

SAinfo reporter