are among the advantages that accrue to investors. Key goals behind the establishment of SEZs are: • To encourage industries to develop in clusters, leading to economies of scale, skillssharing and easier access by suppliers • To c r e a t e i n d u s t r i a l infrastructure to promote investment • To promote cooperation between the public and private sectors • To use the zones as a launching pad for other developments. Apart from attracting foreign direct investment and boosting employment, SEZs can also play a role in adding new sectors or subsectors to an economy. Various industrial parks (private or public) are pursuing similar goals. The emphasis in most of these initiatives is on beneficiation, mainly of minerals but also of agricultural products. South Africa’s most recent Industrial Policy Action Plan has a manufacturing focus, so beneficiation supports the diversification of the economy and strengthens the country’s ability to make things. The cur rent suite of incentives consists of tax incentives, administered by
SARS; grants, administered by the DTIC; and various incentives offered by the municipalities where the SEZ is located. The SARS-administered tax incentives are as follows: • Corporate Income Tax Incentive: Businesses located in a SEZ may be eligible for a reduced rate of 15 percent. • Building Allowance: Businesses and operators may be eligible for the building allowance which allows companies to reduce their taxable income linked to expenditure incurred on the cost of any new or unused building or improvement. This allowance may be claimed at a rate of 10% per annum. • Employment Tax Incentive: Allows employers hiring people, regardless of age, to reduce the amount of employees’ tax paid on behalf of their employees whilst leaving the wage received by the employee unaffected. It allows employers hiring people to reduce the amount of employees’ tax paid by the employer. This creates a cost-sharing mechanism between employers and government. • Customs and Excise Incentive: Goods imported into a customscontrolled area (CCA) situated in a SEZ are relieved from applicable import customs, excise duties and economic restrictions whilst stored and undergoing manufacturing (which includes processing, cleaning and repair) within the CCA. Goods manufactured in the CCA and subsequently supplied to the local domestic market are subject to the payment of the import customs and excise duties that were relieved at time of importation on the imported goods (raw materials). The liability for customs and excise duties, which enjoyed relief on imported goods used in manufacturing in the CCA, cease upon subsequent export. • Value-Added Tax Incentive: Goods and services that are acquired from the domestic market are charged with VAT at 0% and the import of goods is exempt from VAT. This applies only in the SEZs CCA. ■ * This information is taken from the Draft Scoping Report, NonTechnical Summary, prepared by SLR Consulting, January 2020.
Contact Details Address: Northern Cape Department of Economic Development and Tourism, Metlife Towers, Corner Stead and Knight Street, Kimberley 8300 Enquiries: Riaan Warie (Director: Trade & Investment Promotion) Tel: +27 87 310 7683 • Fax: +27 53 831 3668 Fax2email: 086 641 9321 • Cell: 079 877 2828 Email: firstname.lastname@example.org or email@example.com Website: www.northern-cape.gov.za/dedat Enquiries: Mr Hendrik Louw (Director: Regional Economic Development) Email: firstname.lastname@example.org Tel: +27 53 802 1638 • Cell: +27 81 323 2533
NORTHERN CAPE BUSINESS 2020/21