Income Tax Act, special economic zone qualifying company incentives
In force
Income Tax Act 58 of 1962, ss. 12R (special economic zones) and 12S (deduction in respect of buildings in special economic zones)
Effective 2016-02-09 · Applies to private
Section 12R defines a 'qualifying company' for special economic zone tax purposes as one incorporated in, or effectively managed from, South Africa that carries on a trade from a fixed place of business within a Special Economic Zone designated under the Special Economic Zones Act and approved by the Minister of Finance, deriving at least 90 percent of its income from trade within one or more such zones, and that commenced that trade on or after 1 January 2013 or otherwise meets the section's transitional tests; a company is disqualified if it conducts certain excluded manufacturing activities (including spirits, wine, malt liquor, tobacco, or weapons manufacturing), or if more than 20 percent of its deductible expenditure or income involves a connected person.
Section 12S lets a qualifying company deduct an allowance equal to ten percent of the cost of any new or unused building, or improvement to one, that it owns and uses mainly to produce income within a special economic zone. Both sections cease to apply to a year of assessment commencing on or after 1 January 2031.
Source: Full text of law
Special Economic Zones Act, designation and support measures
In force
Special Economic Zones Act 16 of 2014, ss. 4 (purpose), 21 (support measures) and 23-24 (designation)
Applies to both
Section 4 describes a Special Economic Zone as an economic development tool that uses support measures to attract targeted foreign and domestic investment, including facilitating industrial complexes, developing supporting infrastructure, and promoting regional development, without naming information technology, data centers, or digital infrastructure as targeted sectors.
Section 21 lets the Minister of Trade and Industry determine and implement support measures, including incentive schemes, for operators and businesses within a Special Economic Zone, and lets a municipality, provincial government, or public entity design its own additional support measures.
Sections 23 and 24 let national government, a provincial government, a municipality, a public entity, or a public-private partnership apply for an area to be designated a Special Economic Zone, or let the Minister designate one directly in pursuance of strategic national interests, after public comment where the Minister is not acting on strategic-interest grounds alone.
The Department of Trade, Industry and Competition currently designates, licenses, and administers Special Economic Zones under this framework, including through the Special Economic Zones Advisory Board's review of designation applications.
Source: Full text of law