1. SECTION 12 I
“Industrial Policy Projects”

2. What is 12i about?
• Tax Allowance
• Deduct from taxable income. NB: not from tax
• Greenfield projects > R200m
• Brownfield projects > R30 m
• Closing for applications December 2014
• Investment window closes December 2015
Section 12 i

3. Section12 i
How much?
INVESTMENT ALLOWANCE
TYPE OUTSIDE
IDZ
INSIDE
IDZ
MAXIMUM
Qualifying
status
35% 75% Green = R550M
Brown= 350M
Preferred
status
55% 100% Green = R900M
Brown = R550M

4. How much (cont.)
Section12 i
TRAINING ALLOWANCE
Qualifying
status
Lower of
R36 000 per
employee or
actual training cost
Max:
R20 Million
Preferred
status
Max:
R30 Million

5. How it works
• Applications are governed by tax act and
Treasury
• Strenuous requirements
• Applicant is not allowed to make any financial
commitment before approval is received,
except acquire land.
• Approval has no expiry date
Section 12 i

6. Prerequisites to apply
• Manufacturing only
• Spend at least 2% of wage bill on training cost
going forward
• Energy efficiency: Brown fields – improve by
10%; Green fields: ultra modern (as adjudged
by National Energy Efficiency Agency Panel)
• Disqualified if benefits received from another
program
Section 12 i

7. Points scoring
Max
Will use innovative processes? 1
Improved energy efficiency with emphasis on
cleaner technology? 2
General Business Linkages ? 1
Acquiring goods & services from small, medium
or micro enterprises? 1 / 2
Direct employment creation* 2
Skills development* 2
Location in industrial development zone? 1 / 0
Requires 5 to achieve “qualifying status” and 8 to
achieve “preferred status” 10
*in addition to above: requires 2 to qualify 4
Section 12 i

8. Conclusion
• Great for large companies
• Great for those located in an IDZ or SEZ
• Onerous requirements
• Not much time left
Section 12 i

9. Section 12 i