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Income Tax Act, 1962 (Act 58 of 1962)

Regulations made under Section 12I of the Income Tax Act, 1962

6. Greenfield projects - Factors and point allocation

 

 

Innovative processes

 

6.1 For the purposes of sections 12I(8)(a)(i) and 12I(10)(a), a greenfield project is regarded as upgrading an industry within the Republic by utilising innovative processes where the Minister of Trade and Industry, after taking into account the recommendations of the adjudication committee, is satisfied that—
(a) the project will utilise processes of innovation, thereby changing pre-existing techniques and the use of plant, machinery and equipment within the same industrial sector as the project; and
(b) these processes will materially improve production time, reduce production costs, improve product quality or improve product longevity, as compared to existing production time, production costs, product quality or product longevity within the same industrial sector as the project.

(1 point)

 

Improved energy efficiency with emphasis on cleaner production technology

 

6.2 For the purposes of Sections 12I(8)(a)(ii) and 12I(10)(g), a greenfield project is regarded as utilising new technology that results in improved energy efficiency and cleaner technology where the Minister of Trade and Industry, after taking into account the recommendations of the adjudication committee, is satisfied that the project will utilise modern, viable energy-efficient equipment and processes throughout the additional investment allowance benefit period, innovative for the particular industrial sector, as certified by the South African National Energy Development Institute (not taking into account any period before the month in which the industrial policy project reaches 50 per cent of its production capacity).

(a maximum of 2 points depending on energy efficiency)

 

General business linkages

 

6.3 For the purposes of section 12I(8)(b)and 12I(10)(b) , a greenfield project is regarded as providing general business linkages within the Republic where the Minister of Trade and Industry, after taking into account the recommendations of the adjudication committee, is satisfied that—
(a) the project will be engaged in the production of goods, where less than 40% of the local demand for such goods is produced in the Republic or where these goods were not previously produced in the Republic; or
(b) the project will contribute to the global competitiveness of an industrial sector by the production of goods on the basis that identical or similar goods would not be produced in the Republic without substantial capital investment.

(1 point)

 

Acquiring goods and services from small, medium or micro enterprises

 

6.4 For the purposes of sections 12I(8)(c) and 12I(10)(c), a greenfield project will be regarded as acquiring goods and services from small, medium or micro enterprises where the Minister of Trade and Industry, after taking into account the recommendations of the adjudication committee, is satisfied that the project will acquire at least 10 per cent of its raw materials, intermediate products and services based on the annual cost to the industrial project (including direct and indirect operating costs) from enterprises which at the time of acquisition of the goods and services are small, medium and micro enterprises (excluding any small, medium or micro enterprise which is a connected person, as defined in section 1 of the Act in relation to the company carrying on that industrial policy project) during the additional investment allowance benefit period.

(1 point)

 

Direct employment creation

 

6.5 For the purposes of Sections 12I(8)(d) and 12I(10)(d), a greenfield project is regarded as creating direct employment within the Republic where the Minister of Trade and Industry, after taking into account the recommendations of the adjudication committee, is satisfied, that the project will by the end of the additional investment allowance benefit period create at least—
(a) 0,67 full-time jobs (but less than 1 full-time job);

(1 point) or

(b) 1 full-time job,

(2 points)

 

for each R1 million of cost of manufacturing assets in respect of the project (not taking into account amounts above R1 billion).

 

Skills development

 

6.6 For the purposes of sections 12I(8)(e) and 12I(10)(e), a greenfield project is regarded as providing skills development within the Republic where the Minister of Trade and Industry, after taking into account the recommendations of the adjudication committee, is satisfied that the cost of training in respect of the project will exceed as a percentage of the wage bill over the additional training allowance benefit period—
(a) more than 2 per cent of the annual average, but less than 2,5 per cent; or

(1 point) or

(b)        2,5 per cent or more of the annual average.

[Paragraph (b) amended by section 6(a) of Notice No. R. 633 of 2012]

(2 points)

 

Location in industrial development zone

 

6.7 For the purposes of sections 12I(8)(f) and 12I(10)(f), a greenfield project is regarded as being located within an Industrial Development Zone where the Minister of Trade and Industry, after taking into account the recommendations of the adjudication committee, is satisfied that the project is located in an area designated by the Minister of Trade and Industry as an Industrial Development Zone in terms of the Industrial Development Zone programme announced under section 10 of the Manufacturing Development Act, 1994 (Act No. 187 of 1993).

(2 points)

[Subregulation 6.7 amended by section 6(b) of Notice No. R. 633 of 2012]

 

 

PRAVIN J GORDHAN

MINISTER OF FINANCE

Date: 7-7-2010