Govt to take control of new research and development budget

Cape Town - Government will start coordinating a research and development budget to start upgrading and modernising South Africa’s “obsolete” scientific infrastructure and support research and development activities, according to a Cabinet statement issued on Thursday. 

The "proposed budget coordination" will be phased in over the 2017/18 and 2019/20 medium budget periods. 

“The National Development Plan (NDP) notes that research and development and innovation have a key role to play in improving South African’s economic competitiveness and in supporting socio-economic development and employment,” according to the statement. 

In 2006, government introduced the Research and Development (R&D) Tax Incentive, which has since its inception supported scientific projects to the value of R36.1bn. 

READ: Govt on the hunt for rural innovators 

Altogether 962 companies have participated in the R&D tax incentive to date and National Treasury estimates that just over R6bn in tax revenue was foregone as a result of this incentive, the statement read. 

Of the 962 companies, 47% are small and medium enterprises (SMMEs), 12% are large enterprises with a turnover of between R41 million and R100 million, 32% are very large enterprises with a turnover of R100 million and above, and 8% did not disclose their turnover size.

National Treasury introduced the R&D tax incentive in 2006 to encourage South African companies to invest in scientific or technological research and development. 

In terms of the incentive, companies who take part are eligible for a deduction equal to 150% of expenditure incurred directly for research and development and an accelerated depreciation deduction for capital expenditure incurred on machinery or plant used for research and development, the South African Revenue Service (SARS) said on its website. 

Media briefing cancelled 

Thursday’s customary media briefing to give feedback on the Cabinet meeting that takes place every second Wednesday was cancelled at the last minute, as Minister in the Presidency for Monitoring and Planning Jeff Radebe was ill. 

Donald Liphoko, acting CEO of the Government Communication and Information System (GCIS) told journalists in Cape Town to read the statement and direct any queries to Radebe’s office. 

In the statement, Cabinet expressed concern about the “disorderly behaviour” during President Jacob Zuma’s State of the Nation Address (SONA), but lauded his call for radical economic transformation. 

“Cabinet reiterates the President’s call to intensify efforts aimed at driving radical economic transformation and efforts to fast-track implementation.”

In the statement it was also noted that the efforts by government, business and labour in implementing the 9-point plan “are beginning to have an impact”.