DEPARTMENT OF TRADE AND INDUSTRY'S
GUIDE TO INVESTING IN SOUTH AFRICA
INTRODUCTION
Income tax is levied in South Africa on receipts and accruals of income derived, or deemed to have been derived, from sources within South Africa by persons and companies. The nominal rate of taxation on companies is 35%. Dividends are exempt from normal tax in the hands of the recipient thereof, but a secondary tax is levied on companies at a rate of 12.5% on all dividends distributed.
1.1 TAX HOLIDAY
A company which incorporates on or after 1 October 1996 contemplating carrying on a manufacturing project as its sole business, may be awarded a tax holiday, up to a maximum of six years, if the project meets certain conditions. The project may consist of one or more of three components, namely a spatial component, an industry component and a human resource component.
The company must apply to the Regional Industrial Development Board for the approval of its project before it will be granted the tax holiday status. Such status consisting of a zero rate being applied to taxable income.
For each component certified by the board, the company will be entitled to the tax holiday status for two consecutive years. The tax holiday status will commence in the first year in which the company has a taxable income and shall lapse ten years after the project was approved.
Existing entities will not qualify for the tax holiday. Additional information may be obtained from the:
Board for Regional Industrial Development
Private Bag X 86
Pretoria
0001
Tel: (012) 312 8911
Fax: (012) 325 5268
1.2 DEPRECIATION
Depreciation may be claimed in respect of the cost of plant or machinery, implements, utensils and other articles used by the taxpayer for the purpose of his trade. Generally the allowance consists of the amount by which the value of the asset has diminished by reason of wear and tear or depreciation during the year. The asset must be used during the year for the allowance to be claimed, and where used for part of the year the allowance must be reduced proportionately. The allowance is usually calculated according to the declining-balance method.
1.2.1 Plant and Machinery - Capital Allowances
For the following items, the rate of depreciation is 20 per cent per annum on a straight-line basis of cost over five years. (The full rate applies, notwithstanding the use of an asset for only part of the year).
(i)Plant or machinery (new or used) brought into use by the taxpayer or his lessee in a process of manufacture or a similar process after December 15, 1989.
(ii)Plant or machinery (new or used) used by an agricultural co-operative for storing or packing farm products or for subjecting such products to a primary process which is brought into use after December 15, 1989.
(iii)Machinery, implements, utensils or articles brought into use by a hotelkeeper on or after December 15, 1989.
Machinery, implements, utensils, or articles (excluding livestock, motor vehicles used mainly for conveying persons, caravans and aircraft not used for crop-spraying) bought for use for farming purposes on or after July 1, 1988 qualify for the 50:30:20 allowance.
1.2.2 Accelerated depreciation on plant and machinery
For a limited fixed period, depreciation allowances in respect of plant and machinery used in a manufacturing process will be allowed at 33.3% per year over three years.
The accelerated wear and tear allowance will apply to machinery or plant which is new or unused and -
during the period 1 July 1996 to 30 September 1999.
The effect of the accelerated wear and tear allowance is that the present allowance of 20 per cent per annum is increased to 33 1/3 per cent per annum. Such allowance is determined on a straight-line basis.
1.2.3 Building and improvements
Depreciation allowances on building and improvements are as follows :
(i)An allowance of 5 per cent of cost applies to buildings or improvements where construction commenced on or after January 1, 1989 and the building is used wholly or mainly for a process of manufacture or similar process.
(ii)Hotel buildings also qualify for an annual allowance. A 5 per cent building allowance where building commenced on or after 4 June 1988. A special depreciation allowance (machinery, implements, utensils,and articles) at 20 per cent p.a. on a straight-line basis, a wear and tear allowance (office furniture and fittings and vehicles) at 20 per cent p.a. reducing balance, refurbishment allowance at 20 per cent p.a. straight line.
(iii)Storage buildings erected by agricultural co-operatives and improvements thereto on or after January 1, 1989 qualify for an annual allowance of 5 per cent.
(iv)Building construction as part of a residential housing project, requiring at least five residential units either to be let to third parties or to be occupied by employees, qualify for an initial allowance of 10 per cent and an annual allowance of 2 per cent on the cost thereof.
1.2.4 Accelerated depreciation on buildings and improvements
Where the erection of any building, or any improvements to a building, commences during the period 1 July 1996 to 30 September 1999 and such building or improvements are-
the cost of such buildings or improvements will be written off at 10 per cent per annum on a straight-line basis over 10 years, instead of the 5 per cent over a period of 20 years.
1.2.5 Wear and Tear Allowances
Wear and tear allowances are granted in respect of the use of non-manufacturing plant and machinery, office equipment, furniture and motor vehicles. The rate of wear and tear is subject to the discretion of the tax authorities. Normally the following annual rates are granted : Office equipment - 10%, office furniture - 10% and motor vehicles - 20%.
The Revenue Authorities favour the diminishing balance method of calculating wear and tear allowances.
1.3 LEASE PREMIUMS
A lease premium paid for the use of the following may be written off over the period for which the right of use has been granted or 25 years, whichever period is shorter.
(i)Land or buildings.
(ii)Plant or machinery.
(iii)Any film recording or advertising matter connected therewith.
(iv)Any patent, design, trademark, copyright or similar property.
(v)Any know-how connected with the above.
The same write-off period applies to the cost of improvements required to be made by a lessee on land or buildings in terms of a lease agreement.
1.4 SCIENTIFIC RESEARCH
Twenty-five per cent of the cost of capital expenditure for scientific research approved for the purpose on a yearly basis by the CSIR may be deducted in each year. If the research is discontinued or approval is not obtained in a later year, there will be a recoupment of the deductions allowed, subject to a reduction of one-tenth of the amount to be recouped for each completed period of a year for which research was carried on.
1.5 DOUBLE TAXATION AVOIDANCE AGREEMENTS
General agreements
Double taxation agreements to avoid the full taxation of the same income of certain persons, enterprises and property under the laws of two countries have been entered into by South Africa with United Kingdom, Northern Ireland, Israel, Netherlands, Switzerland, Sweden, Lesotho, Botswana, Federal Republic of Germany, Namibia, Malawi, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe, France and Romania.
Sea and Air Transport Agreements
Sea and air transport agreements have been entered into by South Africa with Belgium, Brazil, Republic of China (Taiwan), Denmark, Finland, France, Greece, Ireland, Italy, Japan, Norway, Portugal and Spain.
Further details on tax incentives can be obtained from :
South African Revenue Service
Commissioner for Inland Revenue
PO Box 402
PRETORIA
0001
Tel : (012) 315 5327
Fax : (012) 325 6006
South Africa has a very well developed financial sector which provides business and industrial financing. In addition a number of specialised institutions have been established to provide finance for industrial development.
2.1 INDUSTRIAL DEVELOPMENT CORPORATION OF SA LTD
The Industrial Development Corporation (IDC) operates nationally, offering an extensive range of financing facilities for small, medium and large scale industries to assist entrepreneurs in the establishment and expansion of economically viable manufacturing concerns in South Africa. Although the share capital of the IDC is held entirely by the South African Government, the Corporation operates independently. The most general form of financing is by means of medium to long term low interest rate loans but in certain cases the IDC may also take equity in industrial enterprises. Furthermore, general factory purpose buildings are made available to industrialists on a lease basis. The IDC also offers specific financing facilities such as :
2.1.1 Low Interest Rate Scheme for the Promotion of Exports
To promote investment directed at exports, finance is available at a low interest rate for the first three years for the acquisition of fixed assets (machinery and equipment). Thereafter normal IDC rates for the remaining term of the loan will apply for projects fully complying with the scheme. The scheme is available to industrialists/groups with total assets (fixed plus current assets) of approximately R1 million or more at the time of application, for financing of manufacturing projects that
The low interest rate will apply for first three years, provided 60% or more of the expected sales from the project will be directed towards exports. Where at least 30% but less than 60% of new sales will be directed at exports, halfthe loan will be made available under the Low Interest Rate Scheme. Large groups will only qualify for 50% of the project with a maximum of R20 million at the low interest rate.
2.1.2 Multi Shift Scheme
This scheme is available for the financing of additional working capital and equipment for increased production through an additional shift at a low interest rate for the first three years.
To qualify for the scheme which is available to independent industrialists and groups with total assets of approximately R1 million or more, a project should add at least one additional shift of eight hours, lead to greater employment and maintain a financial structure ratio of approximately one-third owner's funds to total assets after expansion. Although no minimum increase in production or sales is required, no application for working capital of less than R150 000 will be considered.
2.1.3 Low Interest Rate Scheme for the Promotion ofEmployment
This Low Interest Rate Scheme is only available to small to medium sized enterprises and is aimed at the creation of new and/or additional production capacity that will result in creating employment opportunities where the additional employment is created at a limited cost per job.
The scheme is aimed at independent industrialists and groups with total assets of not more than R100 million at the time of application, for the financing of new and/or additional production capacity, of which the cost per new job opportunity will not exceed R100 000, which creates at least 10 additional employment opportunities, has economic merit, will maintain a sound financial structure and will comply with all other normal IDC conditions.
A low interest rate will apply for a period of three years and at the then ruling IDC interest rate for the remainder of the loan period. Where the cost per job is less than R50 000 all funds will be made available at the low interest rate and where the cost per job is between R50 000 and R100 000, the applicant will qualify for only half the loan at the low interest rate and the balance at the ruling IDC interest rate.
2.1.4 Finance for the Export of Capital Goods and Services
Credit facilities, medium- to long-term, are provided by the IDC for capital goods and services exported from South Africa. The finance is available for a period ranging from 2 - 10 years at attractive interest rates, in Rand or US dollar. The facilities are subject to a South African local content of at least 70% and the availability of export credit insurance cover which may be obtained from the Credit Guarantee Insurance Corporation of Africa Limited (CGIC).
2.1.5 Import Credit Facilities for the Purchase of Capital Goods and Services from Abroad
Competitive medium-term finance can be arranged by the IDC through its wholly owned financing subsidiary, Impofin (Pty) Ltd, for local industrialists wishing to purchase capital goods and services from abroad. 85% of the contract price can be financed under this scheme. The credit period is usually for 5 years with repayments starting six months after delivery, payable in equal half-yearly instalments.
2.1.6 Venture Capital Finance
Venture capital finance is available on a selective basis to assist entrepreneurs starting a business, or requiring further permanent capital to finance growth or the commercialisation of new technology.
2.1.7 Finance for the Promotion of Eco-tourism
The Eco-tourism Scheme is aimed at developments in conservation areas under the control of the conservation authorities and private game parks or reserves of 10 000 ha or more.
The scheme provides financing for the expansion and improvement of existing facilities and is primarily aimed at the provision of additional accommodation. Funds for the acquisition of game will not be considered. Private game parks and nature reserves are required to have their management plans approved by the relevant conservation authority. Owners, members or shareholders should, in the case of developments, finance at least 40% of total assets.
Finance will normally be in the form of straight loan facilities, applying ruling IDC interest rates or by risk participation, including equity, where the promoters are not in a position to provide sufficient equity capital.
2.1.8 Finance for the Promotion of General Tourism
The General Tourism Scheme is aimed primarily at the renovation, refurbishment and extension of existing accommodation.
The scheme provides financing to institutions providing accommodation to bone fide tourists. Applicants should either be registered and graded for tourism promotion by SATOUR or be eligible for such registration with and grading after implementation of the proposed project. Turnover for accommodation should represent at least 70% of total turnover. The owners, members or shareholders should finance at least 40% of total assets.
Finance will normally be in the form of loan facilities applying ruling IDC interest rates. The maximum IDC funding per project will be limited to R10 million.
2.1.9 Finance to Improve International Competitiveness
The scheme is available to manufacturers whose total nominal ad valorem import tariff will decrease by at least 10 percentage points over the period 1995 to 1999.
Finance is available to manufacturers at a low interest rate for the acquisition of fixed assets (machinery and equipment) to improve their international competitiveness of existing production capacity and/or create substantially new internationally competitive production capacity by modernising existing plant and equipment, expanding of existing industries or the establishment of a new venture.
The applicant's funding structure should be approximately one-third owners' funds to total assets after the modernisation or expansion.
The scheme provides financing, with a maximum of R40 million per project, provided that the new plant is covered by a performance guarantee by the supplier, the old plant which is to be replaced by new plant is either scrapped or applied in an alternative way to the satisfaction of the IDC, improvement in productivity and international competitiveness is substantial and the applicant is committed to undertake best practise training and work organisation improvements necessary for the achievement of international competitiveness. A low interest rate will apply for the first three years after which the then prevailing normal IDC variable rate will apply for the remainder of the loan period.
The IDC can be contacted at :
The Industrial Development Corporation
PO Box 784055
SANDTON
2146
Tel : (011) 269 3000
Fax : (011) 269 3116
2.2 SMALL BUSINESS DEVELOPMENT CORPORATION (SBDC)
The Small Business Development Corporation Limited strives to harness the power of entrepreneurship by developing small and medium enterprises for the benefit of all South Africans. The SBDC offers development and support programmes specifically designed to meet the needs of business ranging from fledgling micro-enterprises in the informal sector to sophisticated medium size businesses in the formal sector. They offer a full range of services covering the provision of finance, business premises, training, information and advice, counselling, lobbying, marketing, sub-contracting and community projects. No enterprise is too small to be considered for assistance but enterprises whose gross assets exceed R10,0 million are outside the SBDC's parameters.
2.2.1 The Bank Indemnity Scheme
The SBDC operates an indemnity scheme whereby a participating bank may be indemnified against 60% of a loss which it may sustain on facilities which it grants to small or medium enterprises. The facility reduces the level of collateral which banks require in the normal course of business. The scheme is aimed at both existing enterprises and new business start-ups and offers a maximum facility of R400 000,00 per client. The client must contribute at least 10% of the total finance required from his own resources and provide collateral security to at least 20% of the amount of the facility granted. The combined value of the client's own contribution, together with collateral, must at least amount to 50% of the facility granted.
Further details can be obtained from:
Small Business Development Corp. Ltd
PO Box 7780
JOHANNESBURG
2000
Tel : (011) 6437351/9
Fax : (011) 6422791
3.1 SMALL MEDIUM MANUFACTURING DEVELOPMENT PROGRAMME(SMMDP)
The incentive package provides for an establishment grant payable for three years on qualifying assets and a profit/output incentive payable for an additional one year, the industrialist may however qualify for an additional two years profit/output incentive provided the industrialist can meet or exceed the labour remuneration to value added ratio of 55% measured in the fourth financial year.
This incentive package is tax exempted and is available to only new, secondary operations, engaged in manufacturing, as well as processing or assembling. Total investment must not exceed R3 million per enterprise per project.
Incorporated entities, as well as sole proprietors and partnerships (excluding trusts) may apply for assistance.
3.1.1 Establishment Grant
Initial assistance is rendered in the form of a tax-free
establishment grant for the first three years calculated at 10,5% per year on qualifying assets up to a maximum investment of R3 million per enterprise per project. This grant may be claimed on a quarterly basis for the first three quarters of operation.
Qualifying assets
Qualifying assets are defined as:
Land and buildings owned at cost 100%
Land and buildings leased (capitalised at 15%) 100%
Plant and machinery at cost 100%
Capitalised leased plant and machinery 100%
Payment of the establishment grant is subject to the demonstration of a minimum equity of 10%.
3.1.2 Profit/Output Incentive
Assistance is provided for one year in the form of a tax-free profit-based incentive calculated at 25% of profit before tax. This incentive may not exceed the annual establishment up to a maximum amount of R315 000 per year per undertaking, whichever the lesser.
3.1.3 Labour remuneration to value added ratio
To qualify for the fifth and sixth year profit/output incentive the applicant should be required to equal or exceed a labour remuneration value added ratio of 55%.
3.1.4 Foreign relocations
The incentive package also provides for a foreign relocation grant to a maximum value of US $50 000.
Further details can be obtained from :
Board for Regional Industrial Development
Private Bag X86
PRETORIA
0001
Tel: (012) 312 8911
Fax: (012) 325 5268
PROVINCIAL ADMINISTRATIONS AND DEVELOPMENT CORPORATIONS
Enquiries with regard to industrial investment opportunities in the various provinces should be directed to the relevant Member of the Executive Council (MEC) for Economic Affairs or the Provincial Development Corporations as follows:
MEC's for Economic Affairs
Eastern Cape
Private Bag X0054
BISHO
5608
Tel: (0401) 956 4300
Fax: (0401) 918 83
Mpumalanga
Private Bag X11215
NELSPRUIT
1200
Tel: (01311) 554 004
Fax: (01311) 554 006
Gauteng
Private Bag X62302
MARSHALLTOWN
2107
Tel: (011) 355 8000
Fax: (011) 355 8049
Northern Province Private
Bag X9484
PIETERSBURG
0700
Tel: (0152) 293 0850
Fax: (0152) 293 1293
KwaZulu - Natal Private
Bag 54323
DURBAN
4000
Tel: (031) 360 6570
Fax: (031) 360 6568
Northern Cape Private
Bag X5016
KIMBERLEY
8300
Tel: (0531) 814 136
Fax: (0531) 29 464
Western Cape
PO Box 979
CAPE TOWN
8000
Tel: (021) 483 4301
Fax: (021) 483 3886
North West Private
Bag X2033
MMABATHO
2735
Tel: (0140) 292 700
Fax: (0140) 21 851
Free State
Private Bag X264
BLOEMFONTEIN
9300
Tel: (051) 407 1196
Fax: (051) 448 8361
Development Corporations
Mpumalanga Development Corporation
PO Box 1300
BRONKHORSTSPRUIT
1020
Tel: (011) 315 1876
Fax: (011) 315 1897
Northern Province Investment Initiative
PO Box 3490
PIETERSBURG
0700
Tel: (0152) 297 4414
Fax: (0152) 297 4415
Wesgro
PO Box 1678
CAPE TOWN
8000
Tel: (021) 461 6161
Fax: (021) 461 5994
Kwazulu Natal Marketing Initiative (KMI)
PO Box 1105
DURBAN
4000
Tel: (031) 907 8700
Fax: (031) 907 5685
North West Development Corporation
PO Box 3011
MMABATHO
2735
Tel: (0140) 893 000
Fax: (0140) 842 813
Eastern Cape Development Agency
PO Box 66
BISHO
5608
Tel: (0401) 92011
Fax: (0401) 91442
3.3 LOCAL AUTHORITIES
Many of the local authorities provide special incentives, assistance and facilities to industrialists establishing in the area.
4.1 GENERAL EXPORT INCENTIVE SCHEME (GEIS)
The GEIS is an assistance scheme available to qualifying exporters - that is any legal or natural person who has been duly registered with the Department of Trade and Industry as being actively engaged in the export of goods.
The GEIS operates on the basis of the following formula :
Z = U x (M plus or minus E) x P
where
Z = The assistance provided to exporters (tax-free)
U = Export Sales value (FOB)
M = Manufacturing level factor
E = Exchange rate factor through which M is adjusted for
inflation and exchange rate fluctuations
P = Local content factor
As from 1 April 1995 (under the revised GEIS) if the application of (M plus or minus E) gives rise to higher percentages than the following, the following percentages will apply:
Period Category 4 products Category 3 products
1/4/96 - 31/1/97 6% 0%
These benefit levels represent the maximum levels payable, provided the stipulations of the GEIS Guide-lines, such as local content, are adhered to.
It is the Department's intention to continue with these benefit levels until the Scheme ends on 31 December 1997. However, an announcement in this regard can be expected in March 1997.
If the application of (M plus or minus E) gives rise to a lower value than 2%, no incentive will be payable. Product classification under the revised GEIS differ from those under the GEIS in operation until 31 March 1995 in that relative primary products previously classified in category 3 are re-classified to category 2.
Only products which remain in category 3 as well as products in category 4 can therefore qualify for benefits from 1 April 1995. Products are classified as follows:
Category Manufacturing Level M Factor
1 Primary products 0%
2 Beneficiated primary products 0%
3 Material intensive products 12,5%
4 Manufactured products 25%
Note: A category list is available from the Department.
4.2 THE EXPORT MARKETING ASSISTANCE SCHEMES (EMA)
Primary Export Market Research-
Outward Selling Trade Missions-
Inward Buying Trade Missions-
Exhibition Assistance-
4.2.1 The Primary Export Market Research Scheme partially compensates exporters for costs incurred in developing new export markets through personal contacts with potential clients in international markets. Assistance is intended for the small to medium sized export undertaking.
4.2.2 The purpose of the Outward Selling Trade Mission Scheme is to assist South African exporters to make contact with foreign buyers with a view to concluding export orders.
4.2.3 The Inward Buying Trade Mission Scheme makes provision for financial assistance to the organisers of inward buying trade missions so that prospective buyers can make contact with South African exporters with a view to concluding export sales.
4.2.4 The Exhibition Assistance Scheme is available to encourage and assist South African companies registered with the Department of Trade and Industry as exporters to introduce their products into foreign markets by participating in exhibitions. The Department administers two promotional schemes:
Official Group Participation-
Individual Participation
Only undertakings registered with the Department of Trade and Industry as exporters will qualify for EMA benefits.
For more information contact :
The Director :
Export Trade Promotion
Department of Trade and Industry
Private Bag X84
PRETORIA
0001
Tel : (012) 310 9791
Fax : (012) 320 8157
4.3 EXPORT CREDIT RE-INSURANCE
Export Credit Re-insurance is regulated by the Export Credit and Foreign Investment Re-insurance Act, 1957 (Act 78 of 1957) as amended.
The Scheme, which is administered by the Credit Guarantee Insurance Corporation of Africa Ltd (CGIC) in conjunction with the Department of Trade and Industry, provides exporters insurance cover against political and transfer risks, as well as commercial and insolvency risks. Further details can be obtained at :
Credit Guarantee Insurance
Corporation of Africa Ltd
PO Box 125
RANDBURG
2125
Tel : (011) 8897000
Fax : (011) 8861027
4.3.1 EXPORT FINANCE SCHEME FOR SMALL EXPORTERS
This financing scheme will benefit small and medium-sized businesses.
The Export Finance Guarantee Scheme is a financing instrument which will assist current and potential exporters who require finance to execute export orders.
Pre-and post Shipment Finance can be obtained for export orders.
Finance is provided by participating banks and can constitute up to 90 per cent of export orders.
Guarantees are issued by the Credit Guarantee Insurance Corporation (CGIC) and are reinsured with the Department of Trade and Industry. Further details can be obtained at:
Department of Trade and Industry
Private Bag X 84
Pretoria
0001
tel: (012) 310 9582
fax: (012) 320 7918
4.4
The South African primary steel industry actively promote exports of secondary steel products by utilising either or both of the following two schemes :
4.4.1 Fund of the Committee for Secondary Manufacture
The Fund is financially supported by all primary steel producers with a view to increase the usage of primary steel in the manufacture of secondary steel products.
The requirements that claimants against the scheme must conform to include, inter alia, proof that the steel product is from South African produced primary steel and that value of at least 25% was added in the manufacturing process.
More information on the scheme may be obtained from:
The Secretary
Fund for the Committee on Secondary Manufacture
PO Box 6318
PRETORIA
0001
Tel : (012) 320 2450
Fax : (012) 320 1150
4.4.2 Assistance by individual primary steel producers
Most of the primary steel producers in the RSA operate some or other form of price rebate scheme that may be used by exporters of secondary steel products to be more price competitive when negotiating export orders.
The extent of the price rebates are determined between the exporter of the secondary product and the primary producers on an individual basis.
More information on the price rebate schemes can be obtained from the Marketing Departments of the individual primary steel producers.
5.1 TARIFF PROTECTION
South Africa uses import tariff protection selectively to encourage domestic industrial development.
In the case of many products manufactured in South Africa, import tariffs already exist. Manufacturers of products not presently subject to an import tariff, can apply for the imposition of a protective import tariff. Each application is considered on its merits. In principle, protection is readily granted to new industries for a reasonable period of
time to enable them to get established. Factors such as the industry's contribution to the economy, export potential, local content, value added in the production process and the industry's growth and export potential are important considerations for the granting of protection.
Proposed new industries may apply for an advance indication of the granting of protection.
5.2 TARIFF REBATES OR REFUNDS
Provision exists for rebate of duties on the importation of raw materials and components used in the manufacturing process. A substantial number of rebate facilities already exist in respect of specific industries and raw materials/components. An industrialist may apply for the creation of additional rebate facilities if he can demonstrate that the import tariff on the raw materials/components concerned has a substantial effect on his production cost and that he needs the rebate to be competitive against imported products that compete with his end-product. Each application is considered on the merits of the case.
Provision also exists for the rebate or refund of the import tariff on raw materials/components used in the manufacturing, processing, finishing, equipping or packing of goods for export. The rebate or refund of duties in such cases is subject to a permit but permits are readily granted in an endeavour to boost South Africa's export performance.
All applications and enquiries regarding the increase or reduction of import tariffs, the creation of rebate facilities, permits for rebate of the duty on materials/ components for the manufacturing etc. of goods for export, and exemption from surcharge on capital equipment, should be addressed to :
The Chairman
Board on Tariffs and Trade
Private Bag X753
PRETORIA
0001
Tel : (012) 3228244
Fax : (012) 3220149
Enquiries regarding present levels of import tariffs and tariff classification should be addressed to the Commissioner for Customs and Excise in the various main centres or to shipping-agents.
6.1 REVISED CUSTOMS DISPENSATION FOR THE MOTOR INDUSTRY
This dispensation is split between a dispensation for light and heavy motor vehicles. The dispensation for light motor vehicles relates to cars (including station wagons),
light goods vehicles and minibusses with a G.V.M. of less than 3 500 kg and commenced on 1 September 1995. The customs duty on completely built up light motor vehicles of 65 per cent ad valorem will be reduced in phases to 40 per cent ad valorem in 2002. Participating manufacturers are liable to a customs duty of 49 per cent on components imported for the manufacture of motor vehicles. However, they may import components up to a value of 27 per cent of their turnover of locally sold light motor vehicles as a duty free allowance. The duty on the imported components will be reduced in phases until a level of 30 per cent is reached in 2002. Registered exporters of completely build up light motor vehicles and components therefore may participate in the import export rebate credit scheme in terms of which the value of imported components can be rebated up to the exported local content value of light motor vehicles and components.
The dispensation pertaining to heavy motor vehicles i.e. with a G.V.M. exceeding 3 500 kg also commenced on 1 September 1995. The customs duty on completely built up heavy motor vehicles of 40 per cent ad valorem will be reduced in phases to 20 per cent ad valorem in 2000. Participating manufacturers are liable to a customs duty of 49 per cent on components imported for the manufacture of heavy motor vehicles. This duty is rebated to the extent that if certain diesel engines, transmissions, driving axles, tyres and cabs are imported, they effectively only pay 30 per cent in the case of the first four of the aforementioned components and 20 per cent in the case of cabs. The duty on the balance of the components is fully rebated. The duty on all these components will be reduced in phases. Participating heavy motor vehicle manufacturers may also participate in theimport export rebate credit scheme on the same basis as above.
6.2 SUPPORT PROGRAMME FOR INDUSTRIAL INNOVATION (SPII)
The Support Programme for Industrial Innovation provides financial support towards the research and development of new products in all branches of industry. The incentive is based on one third of specified costs up to maximum of R1 million per project.
Enquiries about the SPII can be addressed to the Industrial Development Corporation of South Africa Limited (IDC) which administers the programme.
IDC
PO Box 784055
SANDTON
2146
Tel (011) 269 3000
Fax (011) 269 3116
7.1 RAIL FREIGHT CONCESSIONS
The Railway Administration can under certain circumstances grant reduced rail rates on commodities destined for overseas. Direct enquiries to :
Transnet
Transnet Park
PO Box 72501
PARKTOWN
2193
Tel : (011) 488 7220/1
Fax : (011) 488 712
7.2 OCEAN FREIGHT CONCESSIONS
If exporters find that they are uncompetitive abroad due to normal shipping costs, they may make representations directly to the shipping line.
7.3 ELECTRICITY TARIFF CONCESSIONS
Electricity intensive industries may negotiate for special tariffs with the relevant local authority and/or Eskom.
7.4 AIR FREIGHT CONCESSIONS
Industrialists are advised to contact the airlines to negotiate favourable tariffs.
PREPARED BY :
INDUSTRIAL DEVELOPMENT INVESTMENT CENTRE (IDIC)
Department of Trade and Industry
Private Bag X84
PRETORIA
0001
Tel : (012) 310-9791
Fax : (012) 322-4523
While every effort has been made to ensure the accuracy of the information in this document no responsibility can be accepted for any errors or omissions or for any consequences arising there from.