The Department of Science and Technology (DST) is thrilled by the high number of South African businesses that have applied for government's research and development (R&D) tax incentive this year. It believes more could qualify if they truly contribute to innovation through R&D.
Science and technology minister Naledi Pandor made the call to businesses to apply for the R&D tax incentive at the Southern Africa Telecommunication Networks and Applications Conference (SATNAC) in Hermanus, Western Cape today.
The department yesterday revealed that of the 876 companies that applied for the tax incentive, 227 have been approved.
"While I have been absolutely thrilled by the growth in applications that we have received, I have been concerned that many of the companies which claim the tax for software development and innovation tend to be improving on existing technologies rather than developing innovative solutions or innovative products," said Pandor.
Therefore, she noted, it "has been my pain to deny many of the applications".
The R&D tax incentive falls under section 11D of SA's Income Tax Act, and aims to encourage South African companies to invest in science and technology R&D in the country. Under the terms of the tax incentive, companies are allowed a 150% tax deduction for R&D expenses, as well as accelerated depreciation deduction for capital expenditure on machinery used, according to the South African Revenue Service.
Pandor encouraged the gathering of top ICT minds to get involved in the tax incentive scheme, which is open to small and medium enterprises as well as the corporate sector.
"It is a wonderful opportunity for the private sector to grow its research contribution and to recoup a great amount of the cost it devotes towards R&D. So I look forward to receiving applications from some of you that have become true innovators."
Pandor said the department is working hard to help attract more investments from both global and local IT corporations in R&D and manufacturing facilities in South Africa.
She pointed out that more investment in R&D by both the private and public sector will enable South Africa to secure a greater share of global markets in both R&D and manufacturing.
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