Exploratory Study of the Impact of Research and Development Tax Incentives in South Africa
Date
2012-01-23
Authors
Letaba, Petrus
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
The intention of this dissertation is to explore the impact of research and
development (R&D) tax incentives in South Africa in the context of the objectives
of the government and the experience of companies. This qualitative study
investigated the impacts of R&D tax incentives on financial performance
competitiveness, and on R&D investment patterns. It was also able to identify
factors that might inhibit the R&D tax incentive programme from realising its full
potential.
The main findings of the study suggest that firms in South Africa benefit through
improved cash flow and enhanced competitiveness. This package of incentives
served as a motivation for small, medium and micro enterprises (SMMEs) to
undertake R&D investments. The inhibiting factors include interpretative
uncertainty with regard to qualifying criteria and the misalignment between firm
level R&D strategies and the additional cash flow derived from R&D tax incentive.
The study suggests that these are the main challenges to be addressed by firms
and policy makers.
The results also provide strong support for restructuring the tax incentive process
so that there is pre-screening and qualification by the Department of Science and
Technology before progressing to the tax authorities. This change would have a
dramatic effect on improved effectiveness of the overall system. Firms would
appreciate the increased certainty and reduction in interpretative fuzziness
Description
MBA thesis - WBS
Keywords
Research and development, Tax incentives