If You’re Going Into Manufacturing: Don’t Skip the Investment Incentive Certificate
If you’re about to go into a manufacturing or production investment — buying machinery, building a facility, expanding capacity — one of the costliest mistakes is noticing the investment incentive certificate too late. A certificate obtained at the right time can bring the same investment down in cost noticeably. In this article I explain the logic from a manufacturer’s point of view.
What is an investment incentive certificate for?
The certificate opens a series of support doors for your approved investments. Although it varies by the type, size and region of the investment, it typically includes:
- VAT exemption on machinery and equipment. The VAT burden on machinery purchases within the certificate’s scope is eliminated.
- Customs duty exemption. A customs-duty advantage on imported machinery and equipment.
- Social-security employer premium support. State support on the employer’s share of premiums, tied to employment.
- Tax reduction and interest/profit-share support and similar additional items (depending on region and investment type).
In short: you can bring the same machinery and the same employment to life at a significantly lower cost.
The most critical rule: certificate first, investment second
I underline this. Most of the advantages the investment incentive certificate provides apply to expenditure made after the certificate is obtained. Saying “let’s also get an incentive” after buying the machine and having the invoice issued usually means being too late. That’s why, as soon as you make the investment decision — before you start spending — we need to sit down and talk.
Not every investment is supported at the same rate
Support rates aren’t fixed; they vary according to the region where the investment is made, the sector, and whether the investment counts as strategic/priority. Two manufacturers setting up the same machine in two different provinces may not receive the same support. That’s why the answer to “how much does it gain me” requires a calculation specific to your project.
An extra advantage for manufacturers: ease in VAT refunds
Some production businesses can also benefit from the VAT refund and offset opportunities that come with being a manufacturer. Combined with an incentive certificate, this can bring serious relief to the cash flow of a business entering production.
Before you begin your production investment, if you’d like to talk about which supports you’re eligible for and how to obtain the certificate at the right time, take a look at the Incentives & KOSGEB service, and you can reach me here.
Note: This article is for general information; incentive rates and conditions vary by region/sector and are updated from time to time. For circumstances specific to your business, please get in touch with me.