With the announcement about whether SA or Australia will host the core site of the giant Square Kilometre Array (SKA) radio telescope expected on 4 April, the likelihood of the project coming to SA has received a boost from finance minister Pravin Gordhan, who says the project will qualify for “VAT relief”.

Gordhan made the comments during his 2012 national budget speech in parliament on Wednesday.

Justin Jonas, associate director for science and engineering for the SA bid, says he doesn’t yet know if “relief” equates to “exemption”, but says he expects it does because exemption from local taxes is “almost a prerequisite for these sorts of projects because much of the funding comes from foreign counties and they generally will not pay VAT in another country”.

Jonas says the Australian government has made similar promises of tax exemptions in an effort to boost its bid.

“The treasury and department of foreign affairs have an existing policy on internationally funded projects or organisations,” Jonas says. He says this policy already extends to organisations like the United Nations that enjoy exemption from local taxes.

He says the issue of paying VAT abroad is particularly relevant to contributions from the European Union, which says its funds cannot be used to pay local taxes. However, he adds that this is a “multilateral agreement” because SA needn’t pay EU taxes in similar instances, which makes it a “zero-sum game in the end”. — Craig Wilson, TechCentral