In his recent State of the Nation speech President Ramaphosa made mention of regenerating industrial hubs with an assortment of incentives to incentivise investment in inter alia rural economies. We have a number of existing SEZ‘s and it is worth revisiting these to explore the incentives available.
Benefits of operating within an SEZ
A number of incentives are available to ensure SEZs growth, revenue generation, creation of jobs, attraction of Foreign Direct Investment (FDI) and international competitiveness.
These SEZ incentives include:
Preferential 15% Corporate Tax
Businesses (prescribed in section 24(4) of the SEZ Act) that are located in a Special Economic Zone may be eligible for tax relief, including the reduced rate of corporate income taxation. In addition to satisfying the requirements of the SEZ Act, further criteria for some of the available tax incentives are stipulated in the Income Tax Act, 1962 (Act No. 58 of 1962.)
Building Allowance
Businesses and Operators (prescribed in section 1 of the SEZ Act) operating within a Special Economic Zone may be eligible for tax relief, including the building allowance, subject to requirements contained in the Income Tax Act.
Employment Incentive
Businesses and Operators operating within a Special Economic Zone may be eligible for tax relief, including the employment tax incentive subject to requirements.
Customs Controlled Area
Businesses and Operators located within a customs-controlled area of a Special Economic Zone will be eligible for tax relief as per the Value-Added Tax Act, 1991 (Act No. 89 of 1991), the Customs and Excise Act, 1964 (Act No. 91 of 1964), the Customs Duty Act 2014 (Act No. 30 of 2014) and the Customs Control Act, 2014 (Act No.31 of 2014).
12I Tax Allowance
The 12I Tax Incentive is designed to support Greenfield investments (i.e. new industrial projects that utilise only new and unused manufacturing assets), as well as Brownfield investments (i.e. expansions or upgrades of existing industrial projects). The new incentive offers support for both capital investment and training.
The bulk of existing Industrial Development Zones have SEZ’s within their perimeters. If you looking to expand or introduce a new business that may well benefit from these incentives do not hesitate to contact us for professional advice in this regard.
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