ANNOUNCEMENT 11 Nov 2014

In November 2014, the South African Minister of Trade signed a new tax allowance for Air Liquide to manufacture gaseous oxygen, nitrogen, liquid oxygen, argon and instrument air. This deal falls under section 12I of South Africa's Income Tax Act.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

Government Gazette of the Republic of South Africa,
http://gpw.gov.za/Gazettes/Gazettes/38757_8-5_National_Gazette.pdf

Inception date: 11 Nov 2014 | Removal date: open ended

Tax or social insurance relief

On 11.11.2014 the South African Minister of Trade signed a new deal that allowed for Air Liquide R192,093,403 in tax breaks to be spent on investments and training related to the manufacture of Gaseous Oxygen, Nitrogen, Liquid Oxygen, Argon and Instrument Air. The Ministry claims this tax break amounts to foregone revenue worth R154,161,280 or USD $13,734,784 at the time.

Such a deal was made possible under the framework provided by 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, are deductible from the taxable income of the company and must be approved by the Minister of Trade. 

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AFFECTED PRODUCTS