Subsidy News

08 April 2015

There is never a dull moment at the Department of Trade and Industry�s incentives division, or IDAD as it is called (Industrial Development Administrative Division).

You may have read in the media about the new programs in the pipeline. In this bulletin we cover these plus other developments in a few short paragraphs:

New Tourism Incentive Program by Department of Tourism (TIP):

Two and a half years after taking over the responsibility for development of the tourism industry, the Department of Tourism has finally got something together, which they hope to start rolling out soon. The program will assist tourism businesses to -

  • Become graded. A rebate will be paid on the assessment fee payable to become graded. Fees paid to the Tourism Grading Council of SA after 1 January 2015 will be considered for a rebate of between 30% and 50%.
  • Promote SA abroad. This includes trade shows, outbound missions and road shows. Expenses incurred, such as airfare, accommodation and exhibition fees will be subsidised. It looks similar to the popular EMIA program which promotes exports of SA manufactured goods.
  • Retrofit renewable energy equipment and improved accessibility at tourism destinations. Initially retrofitting will be available to state owned destinations only.

A pilot program will be rolled out in the current fiscal year and depending on its outcome, the final program may be refined and expanded in years to come. The budget for the �medium term� (probably 3 years) is R600 million. The guidelines are not yet available.

New Black Industrialists Development Program (BIDP):

  • The target is to establish or assist 100 new or expanded black owned manufacturing operations over the next three years. The Department of Trade and Industry is budgeting R1 billion for this.
  • The guidelines are still being developed, but Director General Lionel October last week said he wants it ready within a month.
  • The Programme outlines key measures such as access to finance, access to markets, skills development, and standards, quality and productivity improvement.

New Support Program for Industrial Innovation (SPII):

  • The revised program will now be administered by DTI in Pretoria.
  • DTI promised to open the program for applications during April 2015.
  • The revised rules have not yet been published.

New support program for manufacture of Medium to Heavy Commercial Vehicles (MHCV-AIS):

  • The program was launched early 2015 and is open for applications.
  • A grant of between 20% and 35% is offered.
  • The program rules are aligned to those for light commercial vehicles and passenger carriers.

Section 12i Tax Allowance (Industrial Policy Projects):

  • This program was revised with effect 1 January 2015 and is now open for applications until 31 December 2017.
  • Whereas a minimum investment of R200 million was previously required for new projects wanting to participate, the minimum is now only R50 million.
  • The support offered has been increased quite substantially for projects established in Special Economic Zones (SEZ).
  • Note that this program requires applicants to obtain approval of their applications before making any financial commitments.

Manufacturing Investment Program (RIP?)

This program was suspended in October 2013 with the promise that it would reopen by 1 April 2014. That still has not happened and there are no signs that it will happen any time soon. Our guess is 1 April 2016.

This means there is at the moment only one support program available for new industrial projects, the Section 12i Tax Allowance. New projects larger than R50 million are eligible for this.

Manufacturing Competitiveness Enhancement Program (MCEP):

  • This program is open for business, but it is uncertain what the chances are of new applications being approved. This is apparently due to budget limitations and a current backlog of some 600 applications, some as old as 2013.
  • New BEE level 4 requirements being implemented in this program from 1 June 2015, means that the number of qualifying applicants will reduce by at least two thirds compared to the past three years.
  • You are welcome to contact us at Cape Town, Pretoria or Durban if you have any questions about the above or any other grant program, or if you would like to have your project evaluated by our experts to see if it might qualify for any form of assistance.


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