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Enterprise Investment Program
A brief overview
Enterprise Investment Program 1
EIP
(ENTERPRISE INVESTMENT PROGRAM)
–Generic programme
–Manufacturing and Fruit & Veg
packaging
Enterprise Investment Prog...
What is important?
1. Qualifying criteria (mandatory)
2. Evaluation criteria (Merit)
3. Structuring
4. Timing
5. Value of ...
OFFERING
Investment grant
• 30% to 15% of qualifying costs (regressive sliding block
scale)
• Plant, machinery, equipment,...
LEGAL
• Manufacturing Development Act 187 of 1993.
• Income Tax Act no. 58 of 1962 as amended,
Section 10 (1) (y);
• Tax: ...
Target Projects
• New or expansion projects
– manufacturing (MIP)
– Tourism (TSP)
• Also: Upgrading of production capabili...
Mandatory requirements
• Qualifying activity
• Registered legal entity in RSA
• No applications earlier than 12 months or ...
Expansions
Additional mandatory requirements
Enterprise Investment Program 9
 Expand by 30% or 35% in Plant & Equipment
...
Example: Value & timing of grants
PROJECT INFORMATION New/Exp.
R
Plant & Equipment at purchase price 24,000,000
Own land &...
ROLE OF THE AUDITOR
1. Factual findings report
2. Audited financial statements
– Within six months after year-end
3. Manag...
IMPORTANT FOR PLANNING
1. Divisions do qualify
2. BEE rating is important
3. Grant is not taxable (Tax act: 10 (1) (y) ). ...
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Enterprise Investment Program

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Transcript of "Enterprise Investment Program"

  1. 1. Enterprise Investment Program A brief overview Enterprise Investment Program 1
  2. 2. EIP (ENTERPRISE INVESTMENT PROGRAM) –Generic programme –Manufacturing and Fruit & Veg packaging Enterprise Investment Program 2
  3. 3. What is important? 1. Qualifying criteria (mandatory) 2. Evaluation criteria (Merit) 3. Structuring 4. Timing 5. Value of grants Enterprise Investment Program 3
  4. 4. OFFERING Investment grant • 30% to 15% of qualifying costs (regressive sliding block scale) • Plant, machinery, equipment, commercial vehicles, land & buildings • projects capped at R200 million fixed assets Foreign Investment Grant (supplementary): • Actual transport costs to SA from abroad • Subject to maximum of 15% of the value of imported M&E or R10m. Enterprise Investment Program 5
  5. 5. LEGAL • Manufacturing Development Act 187 of 1993. • Income Tax Act no. 58 of 1962 as amended, Section 10 (1) (y); • Tax: section 12 P and 11th schedule • Available for 6 years until July 2014 Enterprise Investment Program 6
  6. 6. Target Projects • New or expansion projects – manufacturing (MIP) – Tourism (TSP) • Also: Upgrading of production capability in existing clothing and textile facilities • Local and foreign owned projects Enterprise Investment Program 7
  7. 7. Mandatory requirements • Qualifying activity • Registered legal entity in RSA • No applications earlier than 12 months or less than 3 months before the planned production starting date. Enterprise Investment Program 8
  8. 8. Expansions Additional mandatory requirements Enterprise Investment Program 9  Expand by 30% or 35% in Plant & Equipment  Increase turnover by 15% & 25% in years 1 & 2 respectively
  9. 9. Example: Value & timing of grants PROJECT INFORMATION New/Exp. R Plant & Equipment at purchase price 24,000,000 Own land & buildings (Expansion: proportional to add floor area) Limited to 100% of P&E 15,960,000 Vehicles at factory site & Customised vehicles. (Limited to 20% of P&E) 40,000 Subtotal 40,000,000 Leased Buildings (Capitalise @ 20%; limited to 20% of P&E. Nil Leased Land – zoned industrial or commercial. (Capitalise@ 20% p.a.) Nil Grand Total 40,000,000 TIMING & VALUE OF EXPECTED GRANTS MEDIUM / LARGE Expected production starting date: 1 January 2012 Base year: Financial year NA Interim year: Financial year 28 February 2012 Claim year 1: Financial year 28 February 2013 3,000,000 Claim year 2: Financial year 28 February 2014 3,000,000 R6,000,000
  10. 10. ROLE OF THE AUDITOR 1. Factual findings report 2. Audited financial statements – Within six months after year-end 3. Management accounts for divisions – Audit requirements 4. Tax Clearance Certificate Enterprise Investment Program 14
  11. 11. IMPORTANT FOR PLANNING 1. Divisions do qualify 2. BEE rating is important 3. Grant is not taxable (Tax act: 10 (1) (y) ). This may change. 4. Capital works in progress – no grant 5. Only CC’s and companies (and trusts in case of TSP) 6. Only private sector shareholders allowed 7. Only fin. lease assets. (must be capitalised) 8. Grant ceases at liquidation 9. Claim every six months 10. Own L&B attract much higher grant than leased L&B. 11. Comply with all laws, e.g. zoning; PAYE, UIF, etc. Enterprise Investment Program 15
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