The promotion of science & technology and the creation of an enabling environment for
countries innovation systems has been a growing worldwide trend in developed countries, with
21 out of 30 member countries of the Organisation for Economic Co-operation and
Development (OECD) currently utilising some form of tax incentive program aimed at
encouraging investment in research and development (R&D) by private industry. 1 Encouraging
R&D and associated innovation is generally seen as an effective tool in advancing science and
technology, which in turn leads to the creation of new products and services, an increase in
international competitiveness of local business, direct foreign investment and social spin-offs in
the form of increased employment and economic growth?
R&D is, however, expensive and involves high levels of technical risk, with the costs and risk
involved often outweighing the potential profit. Consequently, many businesses choose not to
perform R&D, which has resulted in governments of most developed countries having
implemented various incentives to encourage private business to undertake R&D. These
incentives can take the form of either direct incentives (grants, soft loans, subsidies etc) or
indirect incentives (such as tax incentives). Tax incentives effectively subsidise the costs of
R&D, making it a more attractive and profitable alternative for business. Developed countries,
including: the United States of America (US), the United Kingdom (UK), Japan, China, Canada
and Australia have all adopted a combination of both direct and indirect incentives, with various
tax incentive measures receiving much attention in the last 2 decades.
In South Africa the legislation providing for R&D tax incentives has been substantially
amended in recent years through a number of Taxation Amendment Acts,] culminating in the
enactment of s lID of the Income Tax Act 58 of 1962 (the Act). The aim of this dissertation is
to critically examine the current South Afi'ican tax incentive scheme as contained in sliD,
focusing on the eligibility requirements of that incentive. In addition, the dissertation will
highlight design features and characteristics of the incentive, particularly in respect of its generosity, predictability, simplicity, administration and targeting. 4 The design and
characteristics of the South African incentive is then compared to those of three different
countries: the UK, Australia and Canada.s Based on the analysis and comparison, certain
lessons are identified for South Africa6 and various opinions are advanced on the effectiveness
of the current structure and whether particular aspects of it could be improved going forward. / Thesis (LL.M.)-Unversity of KwaZulu-Natal, Durban, 2010.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:ukzn/oai:http://researchspace.ukzn.ac.za:10413/2299 |
| Date | January 2010 |
| Creators | Price, Shane Terrence. |
| Contributors | Schembri, Christopher. |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis |
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