Draft amendments to Section 11D of the Income Tax Act - the research and development tax incentive.
SARS has released draft amendments to Section 11D of the Income Tax Act 58 of 1962 (“IT Act”), the research and development tax incentive, as well as draft explanatory memorandum and a media statement.
The proposed amendments include the following:
- Refining the definition of R&D
- Clarifying the intention of the incentive
- Moving away from an “end result” or IP statute approach to recognise the reality that R&D involves uncertainty and risk
- Moving towards incorporating some principles of the OECD Frascati Manual
- Removal of the “innovative requirement” from the definition
- Amendment of the exclusion for internal business processes
- Introduction of an exclusion for certain agrochemical products
- Introduction of a six-month grace period for receipt of pre-approval applications
- Introduction of an information disclosure requirement
- Introduction of sanctions for breaches of secrecy
The proposed amendments to Section 11D of the IT Act can be found here.
Draft explanatory memorandum on the proposed changes can be found here.
The media statement issued by National Treasury on the proposed changes can be found here.
The due date for written comments is 7 November 2022.
3 /11/2022
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