Overview of the Section 12I Tax Allowance Incentive
The Department of Trade, Industry and Competition introduced the Section 12I Tax Allowance Incentive schemes to boost South Africa’s manufacturing sector and enhance the skills and productivity of the labour force. The programme comprises two main schemes: the Investment Allowance and the Training Allowance.
Industrial Policy Project Investment: Section 12I Investment Allowance
The Investment Allowance calculates deductions from taxable income for qualifying assets. Greenfield projects must invest a minimum of R50 million, while Brownfield projects require an additional R30 million.
All qualifying manufacturing assets must be classified under “Section C: Manufacturing” in version 7 of the Standard Industrial Classification (SIC) code. Companies must acquire new and unused buildings, plants, and machinery after approval. They must also bring these assets into use within four years.
The DTI issues an approval letter specifying the approved amount for qualifying assets. Once approved, the South African Revenue Service publishes notices of companies that qualify under the Section 12I Tax Allowance Incentive schemes.
Greenfield and Brownfield projects earn points differently. Based on the evaluation, projects receive either “Preferred” or “Qualifying” status.
Training Allowance
The Training Allowance allows companies to claim a deduction for employee training expenses. The DTI calculates the allowance as the lesser of the total training costs or R36 000 per full-time employee.
This incentive encourages companies to invest in the skills development of their workforce while benefiting from tax relief.
How We Can Help You Access Section 12I Incentives
Our team provides guidance and assistance to help companies qualify for the Section 12I Tax Allowance Incentive schemes. We support applications for both the Investment Allowance and the Training Allowance, ensuring you maximise your approved benefits.
Contact us today to begin the application process and secure your funding from the Department of Trade and Industry (DTI).
