The South African government offers the R&D tax incentive under section 11D of the Income Tax Act (Act No. 58 of 1962) in order to promote private sector R&D investment in the country. R&D is required in order to boost innovation in the business sector, by improving the capability for developing new products and processes and improving existing ones. This is crucial for improving competitiveness and growth of the South African economy.
The incentive allows any company undertaking scientific and or technological R&D in the country to deduct 150% of its R&D spending when determining the taxable income. The incentive is available to businesses of all sizes and in all sectors of the economy.