Exploratory Study of the Impact of Research and Development Tax Incentives in South Africa
The intention of this dissertation is to explore the impact of research anddevelopment (R&D) tax incentives in South Africa in the context of the objectivesof the government and the experience of companies. This qualitative studyinvestigated the impacts of R&D tax incentives on financial performancecompetitiveness, and on R&D investment patterns. It was also able to identifyfactors that might inhibit the R&D tax incentive programme from realising its fullpotential.The main findings of the study suggest that firms in South Africa benefit throughimproved cash flow and enhanced competitiveness. This package of incentivesserved as a motivation for small, medium and micro enterprises (SMMEs) toundertake R&D investments. The inhibiting factors include interpretativeuncertainty with regard to qualifying criteria and the misalignment between firmlevel 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 firmsand policy makers.The results also provide strong support for restructuring the tax incentive processso that there is pre-screening and qualification by the Department of Science andTechnology before progressing to the tax authorities. This change would have adramatic effect on improved effectiveness of the overall system. Firms wouldappreciate the increased certainty and reduction in interpretative fuzziness
Year of publication: |
2012-01-23
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Authors: | Letaba, Petrus |
Subject: | Research and development | Tax incentives |
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