On 22 February 2023, the Minister of Finance has announced the extension of the section 11D tax incentive for research and development (R&D) in South Africa for another 10 years, until 31 December 2033. This incentive allows companies to claim a 150% deduction on qualifying expenditure for eligible scientific and technological R&D activities.
Moreover, the following changes to the incentive following:
- South Africa will remove the restriction on R&D associated with internal business processes, allowing for innovations intended for sale, internal use, or use by connected parties to qualify for the tax incentive program.
- South Africa’s Department of Science and Innovation (DSI) has introduced a grace period enabling taxpayers to claim expenses incurred up to six months before submitting their application. Prior to this change, only expenses incurred after the application’s submission date were claimable.
- To simplify administration by the Department of Science and Innovation (DSI) and improve the taxpayers’ comprehension, the definition of R&D will be made clearer.
