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Agro-Processing Support Scheme

The Objectives of the Agro Processing Support Scheme:

The objective of the Agro Processing Support Scheme is to stimulate investment by South African agro-processing/beneficiation (agri-business) enterprises. The investment should demonstrate that it will achieve some of the following:

  • Increased capacity,
  • Employment creation,
  • Modernised machinery and equipment
  • Competitiveness and productivity improvement,
  • Broadening participation.

Qualifying Processes/Projects

New and existing agro-processing/beneficiation projects. This can also involve a wide range of processing or beneficiation activities of post-harvest, that result in value addition and/or enhanced storage life, such as cleaning, sorting, grading, waxing, controlled ripening, labelling, packing & packaging, warehousing, canning, freezing, freeze drying, wood carving, extrusion, synthesizing, polymerisation, and various levels of processing that change agricultural product form. In the forestry value-chain may also include sawing, pulping, peeling and preservation.

The Scheme will be targeted at five (5) key identified sub-sectors (focus areas) as follows:

  • Food and beverage value addition and processing (including Black winemakers);
  • Furniture manufacturing;
  • Fibre processing;
  • Feed production; and
  • Fertilizer production.

Interpretation of the focus areas within each sector will be at the discretion of the dti. Agro-processing/beneficiation activities will be considered based on economic impact in terms of job creation, geographic spread and strengthening supply chains.

Mandatory Conditions

The applicants must:

  • Be a registered legal entity in South Africa in terms of the Companies Act, 1973 (as amended) or the Companies Act, 2008 (as amended); the Close Corporations Act, 1984 (as amended) or the Co-operatives Act, 2005 (as amended).
  • Be a taxpayer in good standing.
  • Be involved in starting a new Agro-processing/beneficiation1 operation or in expanding or upgrading an existing Agro-processing/beneficiation operation.
  • Be B-BBEE compliant in terms of the B-BBEE codes (achieve level 1 to level 4) and submit a valid B-BBEE certificate of compliance or affidavit.
  • Undertake an investment project which should result in retaining and creating direct employment.
  • Indicate that the project will be able to boost the local capacity of identified product(s); or where possible prospects of export orientation.
  • Adhere to sectorial minimum wage and legislative requirements governing the sector.
  • Demonstrate that at least 50% of the inputs (raw materials) will be sourced from South African suppliers and that at least 30% of the inputs will be sourced from Black South African suppliers in particular.
  • Where inputs cannot be sourced locally and from Black suppliers, applicants must provide a motivation including a sourcing plan to adhere to 4.1.8 within 2 years.
  • Commencement date of the project or activities applied for must take place within 90 calendar days after the application has been approved.

Going forward, incentive and Dream Team Capital can play an even more important role in the co-ordination, integration and reporting on the consolidated performance of the various fragmented energy efficiency initiatives in the country. Contact us today for professional assistance in streamlining your application for the Agro Processing Support Scheme.

12I Tax Incentive

The 12I Tax Allowance Incentive, according to Income Tax Act, 1962 (Act No. 58 of 1962) provides an allowance for businesses to implement energy efficiency savings. The savings allow for tax deduction of 95c/kwh saved on energy consumption.

The 12I Tax Allowance Incentive allows tax deduction for all energy carriers (not just electricity) with the exception of renewable energy sources. For the eligibility to claim the deductions, measurements must be kWh equivalent. The verified and measured energy efficiency saving must be over a period of 12 months known as implementation/assessment period which is compared in contrast with the 12 months of baseline measurement. The baseline measurement and savings are verified and measured by a SANAS accredited Measurement and Verification (M&V) Body which assigns an M&V professional.

12I Tax Allowance Incentive Aim

The 12I Tax Incentive seeks to promote Greenfield and Brownfield investments with the objective to boost the productivity of the South African manufacturing sector and increase the productivity of the human capital.

The minimum investment required in qualifying assets is ZAR 50 million for a greenfield project (projects that use only new and unused manufacturing assets) and an additional investment of ZAR 30 million for a brownfield project (expansions or upgrades of existing industrial complexes).

The total investment allowance range between 35% and 55% (or ZAR 350 million and ZAR 900 million) depending on the type of the investment, the status classification, and the localization.

12I tax allowance criteria

  • The minimum investment in Qualifying Assets required is R50 million for a greenfield project and an additional investment of R30 million for a brownfield project.
  • Manufacturing assets to be acquired and contracted for on or after the date of approval. 12I, par. 1 of the ITA

Qualifying Assets

For the purpose of this act Qualifying Assets are defined as:

new and unused buildings and new and unused plant & machinery contracted for and acquired after the date of approval of the Section 12I tax allowance and brought into use within 4 years from the date of approval (implementation period).

Greenfield vs Brownfield Investments

The Dti has divided the Section 12I tax allowance criteria into two groups, the Greenfield investments which are new industrial projects that utilize only new and unused manufacturing assets, and the Brownfield investments which are expansions or upgrades of existing industrial projects.

Should you be interested in applying for the incentive, Dream Team Capital can assist you. Contact us today for professional assistance in streamlining your application for the 12I Tax Allowance Incentive