The R&D Tax Incentive is also known as Science & Technology R&D Incentive. It is provided for in Section 11(D) of the Income Tax Act.
The incentive is aimed at encouraging businesses to undertake and invest in R&D in South Africa. The objective is to help companies build capabilities to create new products, processes, devices and techniques, and, or significantly improve existing ones. This incentive is part of a package of measures that the government of South Africa has introduced to support R&D-led innovation, industrial development and competitiveness.
This incentive encourages private-sector investment in innovation and R&D. It helps companies reduce the risk of R&D investment. From an economic perspective, it hopes to develop skills, create jobs and boost economic growth.
This incentive is available to businesses of all sizes in all sectors of the economy that are registered in South Africa.
A company undertaking R&D in the Republic of South Africa qualifies for a 150% tax deduction of its operational R&D expenditure.
Companies are also allowed an accelerated depreciation on plant and machinery on a 50/30/20 basis over 3 years.