Business Finance Grants for the Automotive Industry
The Automotive Investment Scheme (AIS) is a business finance incentive designed to grow and develop the automotive sector through investment in technologically-advanced automotive production and investment. AIS provides for taxable cash grants of 20% of the value of qualifying investment in productive assets, as approved by the Department of Trade and Industry (the DTI). An additional taxable cash grant of 10% of the value of qualifying investment in productive assets may be available to ‘strategic projects’, which must achieve two economic benefit requirements, as outlined in the AIS Guidelines.
Objectives of the AIS
The AIS was designed to grow and develop the automotive sector, through business finance investments in new and/or replacement models and components, with the intention of: increasing plant production volumes; sustaining employment; and strengthening the automotive value chain.
What the Incentive Scheme offers
The AIS provides for a taxable business finance grant of 20% of the value of qualifying investment in productive assets, as approved by the DTI, to be disbursed over a three-year period.
- An additional taxable cash grant of 5 or 10% may be available to projects that are deemed by the DTI to be ‘strategic’ in nature.
- An additional taxable business finance grant of 5% of the value of qualifying investment in productive assets may be available to projects that meet the requirements as stated in the AIS Guidelines (paragraph 7.2).
Eligible applicants for AIS business finance include: light motor vehicles or automotive component manufacturers; registered legal entities in South Africa, in terms of the Companies Act, 1973 (as amended) or the Close Corporations Act, 1984 (as amended), which undertake manufacturing in South Africa; and taxpayers in good standing, who are able to provide a valid tax clearance certificate before the AIS grant is disbursed.
Light Motor Vehicle Manufacturers
These manufacturers should have achieved or demonstrate that they will achieve a minimum of 50 000 annual units of production per plant, within a three-year period. These manufacturers should demonstrate that they will achieve a minimum of 50 000 annual units of production per plant, within a three-year period.
Component Manufacturers or Deemed Component Manufacturers
These manufacturers should prove that a contract is in place and/or a contract has been awarded and/or a letter of intent has been received for the manufacture of components to supply into the light motor vehicle manufacturer supply chain, locally and/or internationally. These manufacturers should be able to prove that after the investment has been concluded, at least 25% of the total entity turnover or R10m annually would have been achieved by the end of the first full year of commercial production, as part of the light motor vehicle manufacturer supply chain, locally and/or internationally.
Benefits of Production Incentives
These incentives aim to assist the automotive industry in its efforts to become more competitive. A cash grant is offered, calculated as a percentage of the applicant’s gross profit. The grant may be used in a variety of ways, e.g. upgrading of production equipment; developing people; improving processes, optimizing materials usage and developing new products.
We will provide a competent incentive consultant to work out the best incentive package for your business finance efforts. Fill your details in using the form below and we’ll arrange for one of our approved and recommended specialists to contact you. He’ll work out the best course of action to obtain these incentives. It’s a 100% free, no obligation service. Only when you decide to engage his services, fees will be discussed.
Or call one of our advisors for more information on:
Tel: +27 (012)348 5871
Fax: +27 (012)348 3287