ANNOUNCED AS TEMPORARYNo
Tax or social insurance relief
On 15 July 2015, the South African Minister of Trade signed a new deal that allowed for Naledi Forging R1,710,074,080 in tax breaks to be spent on investments and personnel training related to the manufacture of train locomotive and wagon wheels. The Ministry estimates the foregone revenue to be R252,534,240 (USD 20,458,893 at the time).
The described tax break is awarded under Section 12I of the South African Income Tax Act of 1962. Section 12I allows for tax incentives in both “Greenfield investments” that are considered new industrial projects that utilise only new and unused manufacturing assets as well as “Brownfield investments” which are expansions or upgrades of existing industrial projects. Such investments are to be destined to manufacturing assets and training of employees allocated to such projects. Priority is given to the latter type of projects. Allowances for the manufacturing sector may amount to up to R900 million and up to R30 million for training purposes per participating firm. Subject to the approval of the Minister of Trade, these allowances are deductible from the taxable income of the participating company.
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