MANUFACTURING INVESTMENT PROGRAMME

Local and foreign owned Entities are eligible to apply for MIP incentives. Entities are defined as Companies (including Divisions & Branches), Close Corporations and Co-Operatives.

Manufacturing includes Agro Processing activities

New or Expanding entities may apply.

Investments of up to R5m in qualifying assets will be classified as "Small Projects" and will enjoy a 30% tax-free cash grant payable over 3 years (10% per annum).

Investments of between R5m and R30m in qualifying assets will be classified as "Medium Projects" and will enjoy a grant of between 15% and 30%. This grant is calculated on a regressive scale and is payable over 2 years. This total value of this grant cannot exceed R4.5m.

Investments of > R30m in qualifying assets will be classified as "Large Projects" and will enjoy a grant of 15%. This grant is payable over 2 years. This grant cannot exceed R30m.

Qualifying Assets include:

Machinery and Equipment (owned or capitalized financial lease) at cost, excluding any office furniture and office equipment.

Rented / Owned Land and Buildings

Customised Commercial Vehicles "used on the production site"

Second-Hand Machinery, Equipment and Commercial Vehicles will qualify for incentives under certain conditions.

Expansion Projects:

Expanding entities are eligible to apply for incentives in instances where they will be increasing their investment in Plant & Machinery by at least 35% of the current historic cost value. Where the expansion project is below R5m and the cost value of existing assets (combined cost of Land and Buildings, Machinery, Equipment and Vehicles) are R5m or below a minimum increase of 30% is required.

Expanding entities that are involved in Clothing and Textiles need only to increase their current historic cost of Plant & Machinery by 10% to be eligible.

The EIP cash grant is Tax-free

Foreign Investment Grant (FIG):

The FIG incentive only applies to NEW Manufacturing entities. Where a South African entity has a direct foreign shareholding of at least 50% they can apply for the foreign investment grant. The Fig is in most cases a once-off claim of "qualifying relocation costs" incurred within 12 months of commencement of production. In order to be eligible for the FIG all of the following criteria need to be attained:

Direct foreign shareholding of 50% or more.

The re-located Machinery & Equipment must be NEW (not reconditioned or 2nd-hand)

The re-located Machinery & Equipment must be fully paid up with foreign capital

The re-located Machinery & Equipment must be free of lien (debt).

In terms of the FIG, the following re-location expenses are claimable:

Freight costs for the re-location of the Machinery & Equipment to South Africa*

Certain statutory costs (Duty, Warfage, Handling / Agency fees, etc).

Travelling costs (return airfare – economy class) + accommodation for technicians who are sent to South Africa to install the Plant & Equipment.

Cost of offloading the Machinery & Equipment in SA and transporting it to the factory.

Insurance from point of origin to final destination in South Africa.

*The cost of transporting the Machinery & Equipment to the foreign port is regarded as non-qualifying.

The value of the FIG claim is limited to the lower of:

Actual qualifying re-location costs (per the summary above).

15% of the cost of the re-located Machinery & Equipment

R 10,000,000

SEE : TOURISM SUPPORT PROGRAMME