Government Grant and Incentive
The government has various priorities which have been set out in the high level strategy documents such as the National Development Plan, Industrial Policy Action Plan, and the National Growth Path. The Ministry of Finance is the main government department which provides the overall financial resources to implement these priorities.
What is clear is that government is taking a more interventionist approach to stimulate the economy to create jobs and alleviate poverty. Some of the main areas of focus will be:
- Boosting private investment in labour intensive industries, competitiveness and exports;
- Infrastructure investment; and
- Interventions to ensure environmental sustainability.
One of the ways government influences private sector investment is the use of government grants and incentives. These incentives are linked to the three focus areas above. It is clear that the amount that the government is allocating to incentives is increasing rapidly if one looks at the R20 billion for the Industrial Policy incentive, R9 billion Jobs Fund, R800 million Green Fund, and the increase in the budget disbursed by the Department of Trade & Industry which is expected to increase to R7 billion by 2014.
The 2013 Budget has made the following announcements on incentives:
- Sadly a reduction by R2.3 billion in the allocation to DTI incentives for 2013/14 and 2014/15;
- Continue with the implementation of the Manufacturing Competiveness Enhancement Programme;
- A new incentive for Special Economic Zones of a reduced corporate tax rate of 15% with an employment incentive and an accelerated depreciation similar to the Urban Development Zones;
- A Biofuels Production incentive for the infant industry; and
- Section 12K which exempts carbon credits from income tax has been extended to 2020.
- It is vital that companies fully understand the available incentives across the spectrum.