Page 26 - SAIT Compendium 2016 Volume2

Tax holiday
(c)
Address
Para 12G(7) INCOME TAX ACT: REGULATIONS ANd NOTICES regs
the company manufactured ...................................................... ...................................................................................... ...................................................................................... ...................................................................................... ......................................................................................
Date ....................................................................
Signature ..........................................................
The resolution of authorisation is attached hereto.
Reported on in terms of our quali ed*/unquali ed* report dated ............................................................................... attached.
Place: ..................................................................................... Date: ................................................
Auditor: .................................................................................
1 De nitions
REGULATIONS MADE UNDER SECTION 12G (7)
Promulgated under
GN R1227 in GG 22848 of 21 November 2001 SCHEDULE
1.1. In these Regulations, unless the context otherwise indicates, any word or expression to which a meaning has been assigned in the Income Tax Act, 1962, bears the meaning assigned thereto, and—
‘date of commercial production’ means the month in which the project reaches 50 per cent of its production capacity;
‘the speci ed period’ in relation to any condition that a strategic industrial project is required to meet, means the period beginning from the date of commercial production and continuing for a period of three years after that date, or such shorter or longer period approved by the Minister on recommendation of the adjudication committee;
‘South African production’ excludes for the purposes of regulations 2 and 3, any production of any other project which has been approved as a qualifying strategic industrial project under the provisions of section 12G of the Income Tax Act, 1962.
Computer and computer related activities as well as research and development activities
1.2. For the purposes of paragraphs (b) and (c) of the de nition of ‘industrial project’ in section 12G (1), ‘computer
activities and computer related activities’ and ‘research and development’ shall have the same meaning as de ned in terms of the most recent Standard Industrial Classi cation as issued by Statistics South Africa under the following headings—
(a) Computer and Computer Related Activities
SIC-code Industry description
8610 Hardware consultancy
8620 Software consultancy and supply
8630 Data processing (other than standard secretarial services) 8640 Data base activities
(b) Research and Development
SIC-code Industry description
8710 Research and experimental development on natural sciences and engineering
2 Criteria for Strategic Industrial Project
Increase in production and displacement
2.1 In determining whether an industrial project will increase production of a South African industrial sector after taking into account any displacement within that industry sector, as contemplated in section 12G (4) (b), the Minister must be satis ed that—
(a) the project will not result in a net reduction in jobs in the sector in which the project is classi ed; and
(b) the expected loss in production for other South African businesses within the same industry sector does not exceed 40 per cent of the production expected from that industrial project, and for this purpose—
(i) the 40 per cent limit must be complied with during each year of the speci ed period;
*Delete where not applicable
18 SAIT CompendIum oF TAx LegISLATIon VoLume 2