Business Process Services (BPS)
The South African government implemented a Business Process Outsourcing & Off-shoring (BPO&0) incentive programme as from July 2007. Between July 2007 and March 2010, the incentive resulted in the creation of at least 6,000 new jobs and attracted R303 million in direct investment.
As part of a process of improving South Africa’s position as an investment destination, a systematic review of the BPO & O incentive programme was undertaken with the private sector resulting in a revised BPS incentive.
The BPS aims to attract investment and create employment in South Africa through off-shoring activities.
- A base incentive as a tax exempt grant paid over three years for each offshore job created and maintained.
- A graduated bonus incentive paid as follows:
- 20% bonus for more than 4000 but less than 8000 offshore jobs paid once off in a year in which the bonus is reached;
- 30% bonus for more than 800 offshore jobs paid once off in the year in the year in which the bonus level is reached.
the dti will determine whether an applicant is eligible to benefit from the BPS incentive, based on the requirements that an applicant (legal entity):
- must be performing BPS activities;
- may be involved in starting a new operation or expanding an existing operation in order to perform BPS activities, which may be operated from more than one physical location in South Africa;
- must, by the end of three years from the start of operation of the new project or the expansion, have created at least 50 new off-shore jobs in South Africa, as defined in the BPS Incentive Programme Guidelines;
- must commence its commercial operations no later than six months from the date on which the BPS incentive grant was approved. Failure to reach this target date will lead to the cancellation or disqualification of the application, thus requiring the applicant to submit a revised application to submit a revised application to reapply for the grant; and
- if in a joint venture arrangement, must have at least one of the parties registered in South Africa as a legal entity.