ANNOUNCEMENT 18 Dec 2013
In December 2013, the South African Minister of Trade signed a new tax allowance for Gibela Rail Transportation Consortium (Pty) Ltd to manufacture railway train products. This deal falls under section 12I of South Africa's Income Tax Act.
NUMBER OF INTERVENTIONS
Government Gazette of the Republic of South Africa,
On 18 December 2013, the South African Minister of Trade signed a new deal that allowed for Gibela Rail Transportation Consortium (Pty) Ltd R496,636,912 in tax breaks to be spent on investments and personnel training related to the manufacture of railway train products. The Ministry estimates the foregone revenue to be R139,058,335 (USD 13,541,177 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.