Companies urged to take advantage of R&D tax incentive

Friday, March 2, 2018

Science and Technology Minister Mmamoloko Kubayi-Ngubane has urged companies to seize the opportunity presented by the Research and Development (R&D) tax incentive programme.

The incentive of the Department of Science and Technology was designed to encourage private sector investment in scientific and technological research and development activities. It was introduced to help the country achieve a target for R&D expenditure of 1% of GDP.

The incentive has supported just over R45.4 billion in R&D expenditure between November 2006 and end February 2018.  A total of 1 087 companies have applied for the R&D Tax Incentive and 899 (or 82%) have received support. Companies of any size in any industry can qualify for the R&D Tax Incentive.  

Speaking at a R&D tax incentive programme meeting with leaders of business at the Innovation Hub in Tshwane on Friday, Minister Kubayi-Ngubane said research and development is crucial for the country to thrive in the knowledge economy.  She encouraged companies to apply for the incentive.

“By undertaking R&D, companies enhance their innovative capabilities. They improve their ability to develop and sell new products and improve on existing products, processes and services. 

“It is vital for both the companies and the country to derive benefits of the R&D Tax Incentive programme,” Minister Kubayi-Ngubane said.  

Through R&D, the Minister said companies also improve their ability to absorb technologies from elsewhere. “By so doing, they expand the human capital and knowledge base in the country.” 

Minister Kubayi-Ngubane said the aim of government in promoting R&D and technological innovation through the R&D Tax Incentive and other programmes, is to broaden the pool of innovative companies in order to boost South Africa’s competitiveness. 

“We want to see more South African products and services in the mainstream of the global economy,” the Minister said. 

In November 2015, the then Science and Technology Minister Naledi Pandor established a task team comprising representatives from the private and public sectors to evaluate the challenges identified at that time, and make recommendations on the improvements to the R&D Tax Incentive in a manner that support the objectives of the business sector, government and regulators. 

According to Minister Kubayi-Ngubane, progress has been made in implementing the recommendations of the task team and there is clear evidence of improved efficiency in the implementation of this incentive. 

A number of developing economies have introduced R&D Tax Incentives over the past decade, following on the trend in Organization for Economic Cooperation and Development (OECD) countries. –

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