What is the Medium and Heavy Commercial Vehicles Automotive Investment Scheme (MHCV-AIS)?
The Medium and Heavy Commercial Vehicles Automotive Investment Scheme (MHCV-AIS), a sub-component of the Automotive Investment Scheme (AIS), an incentive designed to grow and develop the automotive sector through investment in new and/or replacement models and components that will increase plant production volumes, sustain employment and/or strengthen the automotive value chain. The MHCV-AIS provides for a non-taxable cash grant of twenty percent (20%) of the value of qualifying investment in productive assets by medium and heavy commercial vehicle manufactures and twenty five percent (25%) of the value of qualifying investment in productive assets by component manufactures and tooling companies for MHCV’s as approved by the dti.
Eligibility Criteria
Truck Manufacturers
An existing or new manufacturer of medium and heavy motor vehicles (trucks) has to comply with the extent of assembly (i.e. C.K.D. definition as specified in Note 5 to Chapter 98.).
The cab may be imported in an assembled and trimmed condition into South Africa until 31 March 2016.
The engine and transmission, axles, radiators, suspension components, steering mechanisms, braking or electrical equipment and instrumentation may be imported into South Africa but have to be fitted to the floor pan or chassis frame of the truck within South Africa.
The body or cab has to be fitted to the floor pan or chassis frame within South Africa.
With effect from 1 April 2016 the amended CKD definition as specified in ITAC Report 419 will apply and projects with a start of production of 1 April 2016 and beyond that do not comply with the revised definition will not be supported.
Bus Chassis Manufacturers
The chassis, engine and transmission assemblies must comply with the CKD definition of Note 5 as stipulated in Chapter 98 of the Customs and Excise Act”, 1964″.
The chassis, engine and transmission must be assembled semi knocked down in South Africa and the hang-on parts (fuel tank, tyres, battery, wheel rims) for the chassis may be imported into South Africa but have to be fitted to the floor pan or chassis frame of the bus within South Africa.
Projects with a start of production date from 1 April 2016 onwards will be required to comply with the amended CKD definition as specified. From this date projects that do not comply with the revised definition will not be supported under the MHCV-AIS.
Component Manufacturers, Deemed Component Manufacturers, Tooling companies and Bus and Truck Body Manufacturers.
- A component manufacturer that can 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 medium and heavy commercial vehicle manufacturer supply chain locally and/or internationally; and
- A component manufacturer that can prove that after this investment it will achieve at least 25% of total entity turnover or R10m annually by the end of the first full year of commercial production, as part of a medium and heavy commercial vehicle manufacturer supply chain locally and/or internationally.
- In the case of Bus Body Manufacturers where the contract is awarded by the entity to the original equipment manufacturer (OEM) to supply the chassis (for example if the Bid to supply busses was awarded to the Body Manufacturer), proof must be provided that the bid has been awarded and a contract has been entered to with the OEM for the supply of the chassis to the Body Manufacturing entity.
An additional non-taxable cash grant of 5% of the value of qualifying investment in productive assets may be available to projects that meet two of the following economic benefit criteria:
- Tooling;
- Research and Development in South African-related components of the project;
- Employment creation;
- Strengthening the automotive supply chain;
- Value-addition and Empowerment.
