South Africa already has the best IT tax investment incentives in the World

Silicon Cape
15 Oct 2009

“South Africa already has the best IT tax investment incentives in the World.” This is the opinion of Philip Copeman, Project leader of the TurboCASH Accounting project. Copeman is responding to the call by Johan Rupert and Vinny Lingham of the Silicon Cape initiative for a tax-free zone. “It is not a change of tax legislation that we require, but a change of attitude”, said Copeman.

“Section 11(D) of the Act makes for a provision of 150% write off on software development expenditure and gives a 50% write off on capital investment. This is on a par with the UK, Australia and New Zealand and ahead of most other countries. This legislation was specifically written to encourage stimulation in the computer software industry. It is not the legislation, but the will of the participants that is lacking.”

“It has become part of our African culture to ignore the efforts of locally produced software products and to pass up the massive benefits of Open Source alternatives. We choose instead to spend Billions annually on software licenses that we have paid many times over. By promoting the products of foreign owned companies in our schools, universities and corporations, we prepare a generation of IT slaves. We have become a Nation of Installers. “

The TurboCASH Project is a project that was originated in the Cape. We now have over 100 000 users in communities in over 80 countries and 25 languages, supported by thousands of consultants. In South Africa alone we have over 30 000 users and this saves South Africa over R 20 Million per year in import replacement. From a South African viewpoint, what is disturbing is that the intellectual momentum of the TurboCASH Project is being pulled offshore. This is not through exchange control or regulation, but through the willingness of foreign communities to participate in the Open Source process. TurboCASH contributions from Holland, Australia, New Zealand and the USA now exceed our South Africa contributions and these countries offer far less than the tax incentives offered to South Africans.”

“Our lack of input in the Open Source process is not limited to Accounting. In total, Africa contributes less than 2% to the Open Source Code base (lead by the USA and Germany). Projects like the TurboCASH Project are scarce in South Africa. This is unfortunate because while it is great to use Open Source Software, the multiplier effect of actually developing software is massive. The tax incentives are all there, it is the players that are missing.”

Copeman also disagrees with Lingham and Rupert about the restrictions on the ability of South Africans to bill in foreign currencies. “The world is a global village and The Internet has made it even smaller. It is not difficult to effect foreign billings as typically transactions have reduced to micro payments on the Internet. The problem is getting South African Banks to establish their credibility in the offshore markets. In the TurboCASH project, we often get payments rejected because foreign credit card agents see an African server and outright reject the authorization. This however is not a legislation issue. It is not the regulation that makes African vendors appear as 411 scammers, it is our own industry that has not built up our own credibility.

“The problems is not collecting the cash, the problem is coming up with something that foreigners want to pay for. This will only happen if we build our local industry. Before you make your next software service purchase, ask if you are paying a licence to an offshore desk job and a small install fee locally, or are you actually paying for the improvement of our Code Base.”

The original development team of TurboCASH