Automotive Investment Scheme (“AIS”) Amended Guidelines – Most Notable Changes to Consider

Automotive Investment Scheme (“AIS”) Amended Guidelines – Most Notable Changes to Consider

Recent amendments to the AIS guidelines have been published by the Department of Trade, Industry and Competition (“DTIC”), effective 1 July 2021, which has widened the scope of support to include New Energy Vehicle (“NEVs”) manufacturers and Energy Efficient (“EE”) vehicle manufacturers.

The AIS provides grant funding between 20% to 30% to manufacturing companies within the automotive sector, 20% towards original equipment manufacturers (“OEMs”), 25% towards component manufactures (“CMs”) and tooling manufacturers, and 30% towards NEVs and EE vehicle and component manufacturers.

See below a list of most notable changes to consider:

1. Broad Based Black Economic Empowerment (“B-BBEE”) minimum requirements
The minimum B-BBEE requirements to be met at application and claims stages have been amended.

OEMs must achieve level 1 – 6 (as of 01/07/2021) and achieve level 1 – 4 (as of 31/12/2022). CMs must achieve level 1 – 8 (as of 01/07/2021); achieve level 1 – 6 (as of 31/12/2022) and achieve level 1 – 4 (as of 31/12/2023).

2. Bonus Grant
The additional 5% or 10% bonus grant provision (subject to certain economic benefit criteria being met) was removed in the amended AIS guidelines.

3. Qualifying Investment Period
The amended guidelines provide a maximum investment period of 48 months (24 months prior to start of production (“SOP”) and an additional 24 months from SOP).

4. Base Year Employment
Base year employment must still be retained during the entire incentive period from application stage and throughout all claim periods for the approved project. For subsequent applications, the applicant must demonstrate that they have maintained or increased plant base year employment.

5. Transitional Provisions
The guidelines contain transitional provisions that will determine the due date of an application(s). Applications are generally due 120 days before SOP for OEMs and 90 days before SOP for CMs except for projects with an SOP from 01/08/2021 – 30/11/2021 which should be submitted within 60 calendar days before SOP.

6. Competitiveness Improvement Costs – Additional grant up to R1 million
Stand-alone competitiveness improvement applications above R250,000 will be capped at 15% (previously 20%) of the qualifying costs and applications limited to two applications per two-year cycle.

7. Non-qualifying Expenditure
The list of non-qualifying expenses has been updated and now include pre-production expenses incurred outside South Africa, marketing equipment and billboards as well as other miscellaneous costs.

8. Minimum Project Investment
The minimum qualifying investment values for projects have also been updated as follows: CMs R2 million and OEMs R50 million.

A completed application form (new templates available) together will all supporting documents must be submitted within the submission timing requirements for assets to qualify under the AIS. It is also important to ensure that the applicant complies with the B-BBEE requirements under the amended guidelines.

Contact Catalyst Solutions if you require support in accessing the AIS or interested in exploring other grants and tax incentive opportunities.
072 072 1828
082 842 7310

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