South Africa: Future of R&D tax incentive is being evaluated, discussion paper

A discussion paper on the future of the section 11D—the research and development (R&D) tax incentive

Future of R&D tax incentive is being evaluated, discussion paper

The National Treasury on 17 December 2021 released a discussion paper on the future of the section 11D—the research and development (R&D) tax incentive. Comments are due by 25 January 2022.

Read the discussion paper—“Reviewing the design, implementation and impact of South Africa’s research and development tax incentive”—on the National Treasury website.

Overview

In the 2021 budget review, the government proposed to limit, or let lapse, incentives that either erode the equity of the tax system or do not meet their intended objectives. Concerning the R&D tax incentive (which allows a taxpayer a 150% tax deduction of qualifying R&D expenditure), the government has undertaken an extensive exercise to assess the value and impact of this incentive. This exercise includes an impact evaluation by the World Bank (for objectivity); an internal synthesis analysis by the Department of Science and Innovation and, as part of the recently released discussion paper, an online survey whereby the public can provide input into the evaluation of the future of the R&D tax incentive.

The objective of the discussion paper and online survey is to evaluate whether the incentive is to continue beyond the current end date of 30 September 2022 and, if it continues, whether the current design is still suitable.

A media release notes that further announcements regarding the R&D tax incentive will be made in the 2022 budget speech.

Read a January 2022 report [PDF 637 KB] prepared by the KPMG member firm in South Africa 

 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.