Page 52 - SAIT Compendium 2016 Volume2

S 12I regs INCOME TAX ACT: REGULATIONS ANd NOTICES S 12I regs
(ii) two out of the four points in terms of the direct employment creation and the skills development criteria contemplated in section 12I(8)(d) and (e); and
(b) an industrial policy project having preferred status, where the industrial project achieves at least eight out of the 10 potential points in terms of the criteria contemplated in section 12I(8).
5 Brown eld projects – Factors and point allocation
Innovative processes
5.1 For the purposes of section 12I(8)(a)(i) and 12I(10)(a), a brown eld project is regarded as upgrading
an industry within the Republic by utilising innovative processes where the Minister of Trade and Industry, after taking into consideration the recommendations of the adjudication committee, is satis ed that—
(a) the project will utilise processes of innovation, thereby changing pre-existing techniques and the use
of plant, machinery or equipment; and
(b) these processes will materially improve production time, reduce production costs, improve product
quality or improve product longevity.
Improved energy ef ciency with emphasis on cleaner production technology
5.2 For the purposes of section[s] 12I(8)(a)(ii) and 12I(10)(g), a brown eld project will he regarded as
upgrading an industry within the Republic by utilising new technology that results in improved energy ef ciency and cleaner production technology where the Minister of Trade and Industry, after taking into consideration the recommendations of the adjudication committee, is satis ed that—
(a) the manufacturing assets of the project will attain an energy ef ciency improvement of at least 12,5
per cent (but less than 15 per cent) relative to the baseline, determined for the 12 month period prior to the application as certi ed by the South African National Energy Development Institute by the end of the additional investment allowance bene t period; or
(b) the manufacturing assets of the project will attain an energy ef ciency improvement of at least 15 per cent relative to the baseline, as determined for the 12 month period prior to the application, as certi ed by the South African National Energy Development Institute by the end of the additional investment allowance bene t period.
General business linkages
5.3 For the purposes of section[s] 12I(8)(b) and 12I(10)(b), a brown eld project is regarded as providing
general business linkages within the Republic where the Minister of Trade and Industry, after taking into account the recommendations of the adjudication committee, is satis ed that—
(a) the project will be engaged in the production of goods, where less than 40% of the local demand for such
goods are produced in the Republic or where these goods were not previously produced in the Republic; or
(b) the project will contribute to the global competitiveness of an industrial sector by the production of goods where identical or similar goods would not be produced in the Republic without substantial
capital investment.
Acquiring goods and services from small, medium or micro enterprises
5.4 For the purposes of section[s] 12I(8)(c) and12I(10)(c), a brown eld project will be regarded as
acquiring goods and services from small, medium or micro enterprises where the Minister of Trade and Industry, after taking into account the recommendations of the adjudication committee, is satis ed that the project will acquire—
(a) at least 10 per cent; or
(b) at least 15 per cent,
of its raw materials, intermediate products and services, based on the annual cost to the industrial project (including direct and indirect operating costs) from enterprises which at the time of acquisition of the goods and services, are small, medium and micro enterprises (excluding any small, medium or micro enterprise which is a connected person, as de ned in section 1 of the Act, in relation to the company carrying on that industrial policy project) during the additional investment allowance bene t period.
[Reg. 5.4 amended by GN R633 of 20 August 2012.]
Direct employment creation
5.5 For the purposes of section[s] 12I(8)(d) and 12I(10)(d), a brown eld project is regarded as creating
direct employment within the Republic where the Minister of Trade and Industry, after taking into account the recommendations of the adjudication committee, is satis ed that the project will by the end of the additional investment allowance bene t period create at least—
(a) 0,5 full-time jobs (but less than 1 full-time job); or
(b) 1 full-time job,
for each R1 million of cost of manufacturing assets in respect of the project (not taking into account amounts above R1 billion).
Skills development
5.6 For the purposes of section[s] 12I(8)(e) and 12I(10)(e), a brown eld project is regarded as providing
skills development within the Republic, where the Minister of Trade and Industry after taking into account the recommendations of the adjudication committee, is satis ed that the cost of training in respect of the project will exceed as a percentage of the wage bill, over the additional training allowance bene t period—
(1 point)
(1 point) or (2 points)
(1 point)
(1 point) or (2 points)
(a) (b)
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more than 2 per cent of the annual average, but less than 2,5 per cent; or 2,5 per cent or more of the annual average.
(1 point) or (2 points)
(1 point) or (2 points)
SAIT CompendIum oF TAx LegISLATIon VoLume 2