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South African Automotive Support Programme Nears Completion

by Robert Lee, Tax-News.com, London

09 September 2008


South Africa's Minister of Trade and Industry, Mandisi Mpahlwa, has met with stakeholders for a final round of consultations on the detail of South Africa's new Automotive Industry Programme (AIP) business incentives.

The AIP has been developed with the aim of stimulating production of automotive vehicles and component manufacture in South Africa, as well as encouraging the expansion of motor industry investment and employment.

According to the South African Department of Trade and Industry (DTI), the new programme will provide for: stable, moderate tariff protection; a Local Assembly Allowance which will allow manufacturers with a plant volume of at least 50,000 units per annum to import a percentage of components duty free; a Production Incentive that will be based on production value added; and an Automotive Investment Allowance and Company Specific Support Allowances to support approved programmes in such areas as training and skills development, localisation and research and development.

These elements form the core of the programme, but the DTI will undertake further work to investigate the possible inclusion of certain components for medium and heavy commercial vehicles.

"All stakeholders are satisfied that the new programme will form the basis for sustaining growth, employment and exports of the automotive industry until 2020 in line with government’s objectives, in an increasingly competitive global environment," the DTI announced in a statement.

The AIP, which will replace the current Motor Industry Development Programme (MIDP), has been worked on by a team of officials from the DTI and external experts since December 2007. The proposals for the new programme will now undergo scrutiny from the cabinet.

A comprehensive report in our Intelligence Report series looking at Tax-Effective Global Manufacturing and Financing Structures is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report8.asp

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