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International trade

For those firms seeking assistance in export market penetration, several government programs now offer support at levels previously unavailable. The support ranges from financial grants, to subsidy of plant and manufacturing facilities, to facilitation of business processes. The services offered by national government to South African companies who are approaching export readiness are generally delivered through provinicial agents - such as TIKZN in KwaZulu-Natal.

Exporters are offered assistance and close support in prerequisites to successful export, such as company registration, customs procedures, export registration and process - as well as access to incentives for which they qualify. International trading protocols such as Incoterms are explained, and consultants with strategic experience in exporting provide their services without costs.

Details of various export facilitation services such as logistics, are also made available. To expose South African products and services to the global community, TIKZN leads outgoing trade missions to potential export destinations, hosts an online trade faciliation service, conducts workshops - and provides market intelligence so that exporters can assess the likelihood of success of their planned exports.

Incentives - Export Incentives

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Incentives

Government objectives in providing incentives usually include the following:

  • To raise fixed investment in industries
  • Restructure domestic industry towards international competitiveness
  • Promote sustainability of recipient projects
  • Create wealth, generate employment
  • Reduce investment costs for small and medium investors

Small and Medium Enterprise Development Programme (SMEDP)

SMEDP is a grant paid to local and foreign investors, starting up new or expanding current projects, based on approved qualifying assets and activities. The maximum qualifying investment is R100 million per entity. Assistance is rendered to new and expansion projects. The Investment grant is for two years on qualifying assets. An additional one year (year three) investment grant for the human resource intensity can be provided.

It has given the tourism industry a major boost in the form of a lucrative cash-based, tax-free incentive benefit designed to generate employment and create opportunities for the introduction of new and advanced skills. The programme aims to encourage the establishment of new projects and the expansion of existing ones, by subsidising the cost of the investment, training and of transporting equipment from abroad.

TYPES OF ENTITTIES THAT QUALIFY
Incorporated entities (Private and Public)
Close Corporation
Sole Proprietors
Partnerships
Co-operatives (Co-ops)

CALCULATION OF GRANT
Investment Benefit p/a
R0 - R5m 10%
R5m - R15m 6%
R15m - R30m 4%
R30m - R50m 3%
R50m - R75m 2%
R75m - R100m 1%

TOURISM QUALIFYING ACTIVITIES
Short term accommodation
Tour operators
Funicular railways, private railways, aerial cable ways
Water transport vehicles exclusively used for tourists ? dams, lakes, down rivers, harbours and to island along the RSA coastline

QUALIFYING ASSETS - TOURISM
Owned buildings at cost
Leased buildings (capitalised)
Owned furniture and equipment at cost
Leased furniture and equipment (as capitalised in the balance sheet)
Vehicles (owned and/or leased) used for transportation of tourists

QUALIFYING ASSETS - MANUACTURING
Owned land and buildings at cost
Leased land and buildings (capitalised)
Owned machinery and equipment at cost
Leased machinery and equipment (as capitalised in the balance sheet)
Vehicles (owned and/or leased) used for commercial purposes

BEE projects:
5% for projects with qualifying fixed assets up to R5m.
15% for projects with qualifying fixed assets above R5m.

Non-BEE projects:
10% for projects with qualifying fixed assets up to R5m.
25% for projects with qualifying fixed assets above R5m.

Download SMEDP First Claim Application Form     340 KB

Download SMEDP Quaterly Claim Application Form 527 KB

Critical Infrastructure Programme (CIP)

The Critical Infrastructure Programme (CIP) is a cash grant incentive for projects that are designed to improve critical infrastructure in South Africa. It supplements the infrastructure provided by existing public sector or private sector providers by funding a top-up grant of between 10% and 30% of actual costs.
The scheme improves the competitiveness of South African industries and creates employment. It also supports the development of industrial activities that have a strategic economic growth in South Africa. In doing so, the CIP aims to achieve a geographical spread of economic activities within South Africa and prioritise rural and economically depressed areas.

Download CIP Application Form   163 KB

Download CIP Applicant Profile Form  266 KB

 

Foreign Investment Grant (FIG)

The Foreign Investment Grant (FIG), is a cash incentive scheme for foreign investors who invest in new manufacturing businesses in South Africa. It encourages foreign entrepreneurs to invest in new manufacturing concerns by compensating them for the qualifying costs of moving new machinery and equipment from abroad.

The FIG will cover up to 15% of the costs, to a maximum amount of R3 million per entity. It aims to increase direct foreign investment and contribute to an overall economic growth in South Africa.

Export Marketing and Investment Assistance Schemes (EMIA)

The purpose of the EMIA scheme is to partially compensate exporters for certain costs incurred in respect of activities aimed at developing export markets for South African products and to recruit new foreign direct investment into South Africa. EMIA offers exporters financial assistance with market research, trade missions and showcasing products and services at international exhibitions.

Download EMIA Claim Form

Industrial development zones (IDZs)

The Industrial Development Zone (IDZ) is designed to encourage international competitiveness in South Africa's manufacturing sector. An IDZ is a purpose-built, industrial estate linked to an international airport or port, which contains a controlled Customs Secured Area (CSA), exempt from duties, VAT and import duty on machinery and assets.
Each zone is designed for the establishment of strategic investments and to enable exploitation of resource-intensive industries. The IDZ Programme provides facilities and services tailored for export-orientated industries. It also promotes and develops links between domestic and zone-based industries thereby optimising infrastructure, generating employment and creating technology transfers.

For more information contact:
T&I KZN on +27 31 366 0600

Skills Support Programme (SSP)

The Skills Support Programme (SSP) is a cash grant for skills development with the objective of encouraging greater investment in training and creating opportunities for the introduction of new advanced skills.

The grant will benefit investors engaged in manufacturing, high-value agricultural projects, agro-processing, aquaculture, biotechnology, tourism, IT and communication technology, recycling and culture industries.

A maximum of 50% of the training costs, the development of training curricula and land or buildings related to training and up to 30% of the total salaries of the companies will be granted, where the training programme is approved.

Strategic Industrial Projects (SIP)

The Strategic Industrial Projects (SIP), is an incentive programme designed to encourage investments into South African operations from both local and foreign investors. Its primary aim is to contribute to the growth, development and competitiveness of specific industry sectors by providing industrial investment allowances, in the form of tax relief to qualifying industrial projects.
The key objective of SIP is to raise levels of private sector investment in innovative, profitable, and wealth-creating business enterprise in South Africa, whilst simultaneously creating job opportunities within the industrial sector.

For more information contact:
Francisca Strauss
Tel +27 12 310-1414
 
Godfrey Mashamba
Tel +27 12 310-129

International incentives

The SA-EU Trade Agreement decreases the average duty paid on imports to South Africa from the European Union from the current 24% to 19% in the first year, and to 8% in year eight. The average duty on textile and clothing exports from South Africa to the European Union has decreased to 5% in year one and will decrease to 0% in year seven.

The USA's African Growth and Opportunities Act (AGOA) grants duty-free access to African textile and clothing manufacturers, and has seen South African clothing exports to the US jump 60% to more than R1.2 billion.

Incentives and financial assistance in KwaZulu-Natal

Spatial development initiatives (SDIs) aim to facilitate the creation of viable jobs and maximise the ability of local communities to benefit from the increased economic activity. In KwaZulu-Natal, the following well-established SDIs are at varying stages of delivery: 
Pietermaritzburg-Msunduzi SDI: Comprises the leather and footwear industries, wood products and furniture, the aluminium industry, and the establishment of a tourism cluster.

Richards Bay-Empangeni SDI: Opportunities her relate primarily to industry, infrastructure projects, SMME development and tourist attractions. The focus is on the creation of downstream processing opportunities for the wide array of raw materials produced in the area, as well as developing its tourism strength as the gateway to northern KwaZulu-Natal

Lubombo SDI: a corridor stretching from the Greater St Lucia Wetland Park and along the Indian Ocean coastline to Ponta do Ourao in Mozambique, embracing Jozini Dam and game reserves in Swaziland, it is focused on tourism and major agricultural development opportunities.