The Tax Deductibility of the Costs of Clinical Trials in South Africa in Terms of Section 11D of the Income Tax Act 58 of 1962

• Published date: 16 August 2019
• Citation: (2014) IPLJ 157
• Date: 16 August 2019
• Pages: 157-182
• Author: Theo Doubell

157

THE TAX DEDUCTIBILITY OF

THE COSTS OF CLINICAL TRIALS

IN SOUTH AFRICA IN TERMS OF

SECTION 11D OF THE INCOME TAX

ACT 58 OF 1962



Patent Attorney an d Director, Bouwers Incorporated

   

Attorney, Bouwers Incorporated

 

The value of carefully const ructed clinical trials as t he optimum methodology

for testing and evaluati ng new treatments and medicine s is well recognised

within inter national, as well as South Afr ican, research commun ities. South

        

world class expertise in clin ical trial research, modern health ca re facilities, a

  1 The cultural

diversity in South Afr ica provides an opportu nity to investigate eth nic-

           

wealth of participants to i nvestigate emerg ing and re-emerging diseases l it up

by urban deprivation.2

It is therefore hardly surp rising that the clinical t rial industr y in South

Africa is esti mated to have grown by as much as 40 per cent from 1997 to 1998

and yielded an estimate d total budget of R826 million in 2000.3 The value of

              

of foreign revenue and employment for the country. Moreover, undertak ing

clinical trials i n South Africa helps to retai n and increase valuable research

expertise.4

         

the protection of research par ticipants.5 As such, it is imper ative that the

outcomes of clinical trials b e conducted in an ethical ma nner. It is widely

* BEng (Chem; Met) BProc LLB.

** BCom LLB LLM.

1 De partment of Healt h, Guidelines fo r Good Practice in t he Conduct of Clinica l with Human

Participant s in South Africa , Departme nt of Health Publication (20 06) 8, available at htt p://

www.kznh ealth.gov.za/research /guideline2.pdf.

2 Ibid.

3 Ibid.

4 Ibid.

5 Ibid.

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(2014) IPLJ 157

© Juta and Company (Pty) Ltd

accepted that all re search participants a re entitled to minimum g uarantees

that are tran snational and non-negotiable. These entitlements can b e realised

through in- country systems a nd structur es that support and promote good

clinical practice. An i mportant component of these syst ems and struct ures

are national ethics g uidelines for good clinical practice. In recognition of this

imperative, a working group c onvened by the Director General of the National

Departme nt of Health developed Guidelines for Goo d Practice in the Conduct

of Clinical Trials in Human Par ticipants.6

 

The Depart ment of Science and Technology (‘DST’), the South African

Revenue Services (‘SARS’) and National Treasury are some of the bodies

responsible for the promotion of policy instr uments that promote innovation,

enhance competit iveness and support economic gr owth.7 One such policy

instru ment is the incentive contained in s 11D of the Income Tax Act 58 of

1962, as amended (the ‘Act’). The rationale for s 11D is to incentivise and

         

activities in the Republic of South Af rica, with the resultant economic g rowth

within t he Republic.8

           

identify, as in the case of clinical t rials, and is generally regarded a s a ‘non-



production and routine in formation collection’. It is accepted internationally,

 



in tur n would facilitate the development of new medicines, treat ments and/or

vaccines.9

  

The interpret ation of documents, irre spective of the nature thereof, ent ails

construi ng the language used and dete rmining the sc ope thereof. It was said

in Aktiebolaget Hässle et al v Triomed 2003 (1) SA 155 (SCA) that:

“In law”, remarked Lo rd Steyn in R v Secretar y of State for the Home Depart ment, ex parte

Daly [2001] 3 All ER 433 (HL) at 447, “context is everythi ng”. And so it is when it comes to

constru ing the language u sed in documents, w hether the document b e a statute, or a contr act,

  10

Similarly, the following was stated in Fundst rust (Pty) Ltd (in Liquidation) v

Van Deventer 1997 (1) SA 710 (A):

6 Ibid.

7 South Afric an Revenue Service Int erpretation Not e 50, 20 August 2009 para [3] 3.

8 Ibid.

9 Depart ment of Health (n1).

10 Aktiebo laget Hässle et al v Triomed 2003 (1) SA 155 (SCA) para [1] 157.

158 South African Intellectual Property Law Journal (2014) 2

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