Catalyst are more than finance and tax experts; they are technical experts that quickly understand products. They are able to understand emerging technologies and are able to describe complexity in a way that clearly communicates our innovation.
Catalyst are more than finance and tax experts; they are technical experts that quickly understand products. They are able to understand emerging technologies and are able to describe complexity in a way that clearly communicates our innovation.
Catalyst are more than finance and tax experts; they are technical experts that quickly understand products. They are able to understand emerging technologies and are able to describe complexity in a way that clearly communicates our innovation.
of Experience
R&D Tax Claims processed globally
Compliance
A 150% deduction for companies conducting qualifying R&D, governed by section 11D of the Income Tax Act.
For every R1 million spent on approved R&D activities, a qualifying company can deduct R1.5 million from its taxable income. At the current 27% corporate tax rate, that translates to R135,000 in tax savings for every R1 million of qualifying expenditure.
The incentive is jointly administered by the Department of Science, Technology and Innovation (DSTI) and the South African Revenue Service (SARS). Before any deduction can be claimed, the DSTI must approve the R&D activities through a formal adjudication process. SARS then retains independent audit rights over the financial aspects of the deduction. Both stages require careful preparation and the right documentation.
Since the 2024 amendments to section 11D, the definition of qualifying R&D has been simplified and broadened. Companies that were ineligible under the previous definition may now qualify, and expenditure incurred up to six months before the application date can be included.
CONTACT USThe incentive is available to any South African company conducting qualifying R&D, regardless of size or sector. Qualifying R&D is defined under section 11D as systematic investigative or systematic experimental activities that aim to resolve scientific or technological uncertainty, where the resolution is not readily deducible by a person skilled in the relevant field.
The DSTI will typically consider projects that:
If your business is doing work that fits this description, it's worth assessing whether section 11D applies.
For a detailed breakdown of what qualifies and what does not under section 11D, read our guide to section 11D qualifying activities.
The section 11D R&D tax incentive was significantly revised from 1 January 2024. The definition of qualifying R&D was simplified and broadened. The previous exclusion on R&D relating to internal business processes was removed, so companies can now claim for qualifying R&D that benefits the internal workings of the business.
The grace period for retrospective claims was also extended. Approvals can now be backdated up to six months prior to the date of application submission, compared to the previous position where only expenditure from the date of submission was claimable.
These changes have practical implications: companies that were ineligible under the previous definition may now qualify, and applications that were previously declined on the internal process exclusion may now succeed. If your business considered the incentive before 2024 and concluded it didn't apply, the question is worth revisiting.
Qualifying expenditure can include salaries and employee costs directly related to R&D, materials and consumables used in the R&D process, and contractor costs where the work is genuinely R&D. Investment in prototypes and pilot plants may also qualify for the enhanced deduction.
Two important conditions: costs must relate directly to qualifying R&D activities, and the R&D must take place within the Republic of South Africa.
South Africa's R&D Tax Incentive operates on a pre-approval basis. Before any deduction can be claimed, each project must be approved by the Minister of Science, Technology and Innovation as qualifying R&D. This approval is secured through a formal application to the DSTI.
Once approved, qualifying expenditure is claimed as a 150% tax deduction through your SARS tax return. SARS retains audit rights over the financial aspects of the claim, so expenditure must be accurately documented and traceable.
DSTI adjudication timelines vary depending on the complexity of the application, the volume of projects under review, and the quality of the submission. A well-prepared application with a strong technical narrative and clear supporting documentation moves through the process more efficiently than one that requires the committee to request further information.
Catalyst Solutions prepares applications to the standard the DSTI adjudication committee expects, which helps avoid the most common causes of delay.
Since the 2024 amendments, approvals can be backdated up to six months prior to the date of application submission. Expenditure incurred during this six-month grace period can be included in the claim. Previously, only expenditure from the date of submission onwards was claimable, so this is a meaningful change for companies considering an application now.
Following approval, companies are required to submit annual progress reports to the DSTI for all qualifying projects. These reports update the DSTI on project progress, changes in scope, and expenditure. Alongside this, SARS requires detailed supporting documentation for the financial aspects of each claim and retains audit rights for the duration of the claim.
Documentation needs to be maintained throughout the life of the claim, not just at submission. Claims that looked strong on day one can be difficult to defend years later if the evidence hasn't been kept up to date.
No. There is no cap on the incentive. Multiple project applications are permitted per company, and qualifying expenditure can be claimed in full regardless of value. The incentive is structured to reward genuine R&D investment at any scale, from a single project through to an extensive multi-project R&D programme.
Subcontracted or funded R&D is a technical area in all jurisdictions. Under section 11D, receiving payment for R&D does not automatically disqualify a claim, but the treatment depends on the funding arrangement, the nature of the contract, and the structure of the work. Each scenario needs individual assessment.
Catalyst Solutions regularly advises on funded R&D claims and can assess your specific funding arrangements to determine the right approach.
DSTI applications can be declined or returned for a number of reasons, including insufficient detail in the technical narrative, unclear scientific or technological uncertainty, or questions about whether the work meets the qualifying definition.
A returned application is not the end of the process. Applications can be revised and resubmitted, and in many cases the underlying work does qualify but was not described in a way that satisfied the adjudication committee. The 2024 amendments have also broadened the definition of qualifying R&D, which may change the outcome for projects previously declined.
Catalyst Solutions has worked through the adjudication process extensively and can review a returned application, identify the reasons it didn't succeed, and prepare a stronger resubmission.
We work with innovative businesses across a wide range of sectors, from established pharmaceutical companies to fast-growing AI startups. Our engineers, scientists, Chartered Accountants and tax specialists work together on every engagement to identify qualifying activity, align technical work to financial evidence, and build claims with compliance at the heart of everything we do.
Qualified engineers and scientists work directly with your R&D teams. More qualifying activity is captured, and every description reflects the work as it happened.
We design for scrutiny from the outset. Every claim is written with one question in mind: could this be explained clearly to an inspector years down the line?
We manage R&D tax claims across the UK, South Africa, Australia and Germany. As part of the VAT IT Group, we sit within a global tax reclaim organisation serving more than 13,000 companies across 107 countries.
We engage with client teams throughout the year, capturing qualifying activity as it happens and tracking regulatory changes before they affect our clients' position.
Our engineers and scientists engage directly with your technical teams to identify every activity that qualifies under section 11D.
We draft a technical narrative that describes the work accurately and submit the full application on your behalf..
Once DSTI approval is granted, we compile the financial claim for inclusion in your tax return. Every rand of qualifying expenditure is traced, documented, and structured to support a SARS audit, ensuring your claim is maximised.
Section 11D requires annual progress reports to the DSTI for every approved project. We prepare and submit these on your behalf.
We stay engaged between submissions, tracking regulatory changes and maintaining documentation for the life of each claim.
Up to 48.5% of qualifying expenditure can be claimed as a tax offset via the R&D Tax Incentive which is governed by the Income Tax Assessment Act.
In Germany, up to 35% of qualifying expenditure can be claimed via the Research Allowance Act (“FZulG”).
The UK’s new merged R&D Tax Incentive scheme offers tax relief of up to 27% on R&D expenditure.
We assist companies across the globe with R&D Tax Incentive related claims and obtain R&D Tax Incentives for some of the world’s largest listed companies.
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