The main aim of the research and development (R&D) tax incentive is to encourage South African and foreign companies to conduct and invest in scientific or technological R&D in South Africa.

The incentive offers income tax relief in the form of:

•  A deduction equal to 150% of operational expenditure incurred directly for R&D
• An accelerated depreciation deduction (that is, 50:30:20) for capital expenditure incurred on machinery or plant used for R&D.

Identifying and claiming opportunities in an efficient and effective manner requires extensive expertise with the legal, regulatory and judicial regimes that offer, administer and adjudicate them.

Some companies may have this expertise and experience in house. However, most do not so they either engage R&D professionals or leave potentially significant opportunities uninvestigated.

BDO’s R&D tax incentive professionals help companies to:

• Identify opportunities
• Assess eligible R&D activities
• Assess qualifying criteria
• Assist with the application to the Department of Science and Innovation (DSI) 
• Assess qualifying R&D expenditure
• Coordinate claiming the R&D tax incentive
• Assist with record-keeping requirements
• Submit progress reports.

Planning ahead – maximising benefits

When future R&D investments are considered, be aware that:

• SARS will only allow a deduction once the application is approved by the Department of Science and Innovation (DSI)
• Taxpayers are only allowed to claim against expenditure incurred from up to six months before the application is submitted. 

Furthermore, as you consider the impact of future investments or changes in structure, taking R&D tax implications into account as part of forecasting provides a more accurate net cost of benefit to the business, thus positioning your company to make more informed business decisions.

Window period – extended to 2033

In the recent budget speech, Treasury has extended the incentive until 31 December 2033. This extension ensures the continued relevance of the incentive, particularly within sectors such as manufacturing, financial intermediation, insurance, real estate and business services.

Our team will provide you with the knowledge and expertise to access the available incentive as effectively as possible.

Global R&D – BDO’s interactive tool

R&D tax relief is available in a host of jurisdictions around the world. To find out more about the different R&D incentives available globally, BDO has developed an interactive tool. This tool provides a high-level summary of the incentive rates available in many global locations, as well as a simple means of comparison between these jurisdictions.
 

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