StriniPerumal;DepartmentofScienceandTechnologyResearchandDevelopmentTaxIncen=ve:GovernmentSupportforInnova=onAugust24th2017

Talking Points : Research and Development Tax Incentive

1.  Overview

2.  Benefits

3.  Accessing the incentive

4.  Other funding instruments

!  Through this incentive, the government wants to encourage increased R&D in the business

sector, by firms of any size or industry. This is important in order to:

!  Increase the overall investment in R&D.

!  Promote technological advancement and competitiveness.

!  Secure innovation spillovers, expand and retain the R&D workforce.

!  IMF Monitor views tax policy playing an important role in stimulating innovation through its

effects on R&D, entrepreneurship and technology transfer.

!  The incentive is part of a package of policy instruments to promote innovation, enhance

competitiveness, thus supporting economic growth.

Overview

Benefits

!  The incentive provides a 150% deduction in respect of scientific and technological R&D expenditure.

!  Provided that expenditure is incurred for the purpose of: !  Discovering scientific or technological knowledge !  Conducting clinical trials !  Creating any invention that is patentable !  Creating a design that is registrable !  Developing software

!  The incentive also provides deduction for expenditure incurred for: !  pilot plants !  prototypes !  contract R&D (Universities, Research Councils, PhD students) !  Joint Ventures

!  No cap on amount you can claim.

Taxpayer submits

application

• Taxpayer submits an application form to the DST. • The DST acknowledges receipt of application. • The application is assessed.

Adjudication

• The assessment report and application form are presented to the Committee for adjudication. • The Committee makes recommendations to the Minister of Science and Technology.

Certificate

• The Minister's dispacthes letter on whether the R&D activities have been approved or not is sent to the company. • This letter serves as proof to SARS that the company's R&D activities have been approved when claiming the tax deduction.

Progress Reporting

• Companies whose R&D activities have been approved must submit a progress report to the DST, annually, coinciding with their financial year-end reporting.

• Companies should maintain records that support tax expenditure claims and progress of R&D.

Accessing the Incentive

!  Technology and Human Resource for Industry Programme (THRIP) DTi Initiative: THRIP aims to boost South African industry by supporting research and technology development and enhancing the numbers of appropriately-skilled people. 50:50 cost-sharing grant, to a maximum of R8m per annum, across any number of projects.

!  Technology Innovation Agency Seed, Tech Dev and

Commercialisation Funds (TIA): To assist innovators and SMMEs to advance their research outputs. TRL 3 – 9.

!  Sector Innovation Fund (DST): support for the R&D-led growth of

strategic sectors of the economy. Specific to industry associations. Co-funding model.

Alternate Funding Instruments

THANKYOU

StriniPerumalDirectorR&DTaxIncen=vesDepartmentofScienceandTechnologyCell:+27820553240Tel:+27128436829E-mail:Strini.Perumal@dst.gov.za