Latest Updates – Innovation Incentives & Grants

As you would have heard in last week’s budget speech, the Finance Minister announced an extension to the section 11D R&D Tax Incentive. This is great news for the R&D community in South Africa and reaffirms the government’s commitment to furthering the progression of innovation in our country. Given this exciting development, here is an update on the current major innovation incentives in South Africa.

R&D Tax Incentive:

R&D Tax Incentive Has Been Extended! 

The R&D Tax Incentive provides for a supercharged tax deduction of 150% on qualifying R&D expenditure. Similar tax incentives exist around the world and are an integral part of the innovation ecosystems in those countries. Initially there were problems and delays with the pre-approval process, however, this is now being handled professionally by the Department of Science and Innovation (DSI). Decision outcomes are being provided quicker than ever and with a higher approval rating.

This incentive is extremely underutilised – there are still approximately only 300 taxpayers each year that are benefitting from R&D Tax. The majority of the companies benefiting are in the manufacturing and agricultural sectors. There has also been significant uptake from the financial intermediation, insurance, real estate and business services sectors. Part of the plan to extend the R&D Tax Incentive involves a review of the incentive with an aim to improve its usability and utilisation. To this end, we will be meeting with National Treasury and the DSI to discuss amendments. Please be sure to send us any suggestions you may have.

In the interim, please continue to send through any potential R&D projects as early as possible to maximise your benefit from the R&D Tax Incentive.


New Call For THRIP Applications! Up to R15m Available!

In addition to the 11D Incentive, the government has relaunched the Technology and Human Resources For Industry Program (THRIP). This program is aimed at collaborative partnerships between industry and higher education institutions. The ultimate objective of the programme is to develop new technologies for industry application and subsequent industrialisation and commercialisation, through applied research and development.

If you are working with universities in South Africa on innovative applied science or technology, this program could provide your company with a matching grant of up to R5 million per year for 3 years (maximum of R15m). The matching percentage is dependent on the size of your business and its BBBEE level. Knowledge exchange and technology transfer are critical elements with the applying company requiring a suitable research leader to lead and supervise the students involved.


Still A Worthwhile Grant! Up to R5m Available!

The Support Program for Industrial Innovation (SPII) has been available in South Africa for several years. The program also offers matching cash grants of up to R5 million per project and is available to South African companies looking to develop innovative technology. The program is run through the Department of Trade, Industry and Competition (DTIC). While the program does offer lucrative incentives, applicants can experience lengthy delays in having projects assessed and adjudicated. The department is working on bringing on board due diligence consultants which will allow them to clear the application backlogs. This remains a very worthwhile incentive – but you may need to wait a while before seeing any benefits.

Wrap Up:

It is extremely positive that the government has extended the R&D Tax Incentive and relaunched THRIP. It is however important that we utilise these incentives to enable them to achieve their goals of driving the innovation economy in South Africa. All incentives are awarded on a pre-approval basis so it is critical to discuss potential incentive projects with us as early in the life of a project as possible.

If you feel that you are working on a project that may qualify for an incentive, please reach out to us.

 For additional information please feel free to contact:
Justin Shein:

Leave a Reply

Your email address will not be published.