https://www.engineeringnews.co.za

DTI tax incentive boosting investment, job creation in manufacturing sector

DTI tax incentive boosting investment, job creation in manufacturing sector

Photo by Bloomberg

27th May 2013

By: Natalie Greve

Creamer Media Contributing Editor Online

  

Font size: - +

As a result of a growing recognition among Tier 1 manufacturing companies of the 12I tax incentive offered by the Department of Trade and Industry (DTI), the investment leveraged by the 12I has grown by 55% since 2012.

The 12I tax incentive, which had enabled the DTI to leverage R32-billion in investment since 2010, was one of 16 tax incentives offered to manufacturing industries and, besides the Automotive Incentive Scheme, offered the largest incentives.

Market analysts Frost & Sullivan revealed in a media release on Monday that the incentive offered R20-billion in tax breaks, which would be distributed among compliant manufacturing projects between 2010 and 2015.

The investment associated with the 12I had supported the creation of 3 326 direct jobs and 72 219 indirect jobs  between 2010 and 2012.

Eligible companies qualified by scoring points in specific categories relating to innovation; small, medium-sized and microenterprise procurement; energy efficiency; business linkages; Industrial Development Zone positioning; skills development and job creation.

“This incentive is a key opportunity for enterprises in the manufacturing sector, which includes businesses in the clothing, textiles, chemicals, plastics, pharmaceuticals and cosmetics, automotive components, forestry, paper and timber, biofuels, metal fabrication, capital and rail transport equipment, agroprocessing, aquaculture, downstream mineral beneficiation and upstream oil and gas sectors,” commented Frost & Sullivan Africa public sector growth solutions head Adri Grobler.

“The 12I incentive will not, however, cover projects that do not fall under the Manufacturing Division 3 standard industrial classification code, or excluded products such as alcohol, tobacco and firearms,” she said.

The actual tax allowance for investment in manufacturing assets was “significant”, and ranged between R350-million and R900-million a project, depending on the type of project and its status, added Frost & Sullivan Africa public sector research analyst Shakira Maharaj.

In addition, tax breaks of between R20-million and R30-million a project were available for skills development and job creation.

According to Maharaj, 41%, or R20-billion, of the 12I budget had been allocated to 26 projects since the scheme's inception in 2010.

“The awarded tax allowances have been significant thus far, with PhytoAmandla, Rainbow Nation Fuels and Sephaku all having been awarded over R896-million, while Sappi and Arengo 316 have been awarded over R543-million. This financial support represents a considerable effort by the DTI to promote innovation in the manufacturing sector,” she said.

Frost & Sullivan added that, while application processes would prove lengthy for enterprises, the DTI claimed to process applications in about six weeks from submission.

The DTI was expected to release a Parliamentary report on the 12I in June or July this year. This should include a discussion of awarded tax allowances, project and sector support, as well as the impact of the 12I on the overall manufacturing sector.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Showroom

Rentech
Rentech

Rentech provides renewable energy products and services to the local and selected African markets. Supplying inverters, lithium and lead-acid...

VISIT SHOWROOM 
Schauenburg SmartMine IoT
Schauenburg SmartMine IoT

SmartMine IoT has been developed with the mining industry in mind, to provides our customers with powerful business intelligence and data modelling...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.075 0.131s - 138pq - 3rq
Subscribe Now