The South African Revenue Service (SARS) have their own interpretation around what constitutes a manufacturing process. This is important as manufacturing plants are eligible for generous tax allowances when it comes to their specific manufacturing business. But before you start your own manufacturing business there are unfortunately some manufacturing processes that SARS exclude from the manufacturing basket. Below is a list of all the manufacturing companies not regarded as processes of manufacture or processes similar to a process of manufacture. Therefore these manufacturing processes will not qualify for any of the manufacturing tax allowances.
Manufacturing processes excluded
There are nineteen in total, and they are:
1. Processing business statistics by computer.
2. Incubation of eggs.
3. Processing of bills of quantities for the building and Construction industry by computer.
4. Apple sorting and packing plant of a farmer.
5. Operations of a computer bureau.
6. Production of eggs.
7. Motor garage keeper.
8. Dental surgery.
9. Processing of accounts data and the delivery of final statements.
10. Generation or transformation of electricity by a municipality.
11. Computer system for the production of quality assurance documents and drawings.
12. Job scheduling by computer.
13. Electronic diagnosis of samples taken from the human body.
14. Computer aided design system.
15. Storing of perishable products on behalf of various clients at chiller and freezer plants.
16. Data capturing system used for instalment accounting in a batch environment.
17. Cultivating and production of seeds.
18. Vacuum packing.
19. Erection of transmission line towers on site.
You have therefore considered very carefully if the manufacturing tax allowances can be applied to your manufacturing process. The manufacturing process definition has to be carefully interpreted together with the specific processes of manufacture, processes similar to a process of manufacture which SARS have identified as being qualifying manufacturing companies.
If you are uncertain about whether your manufacturing company qualifies for these manufacturing tax allowances, please contact us here for taxation advice.