Northern Cape Business 2020/21 edition

SPECIAL FEATURE
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 create industrial
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 current 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, Non-
Technical 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: rwarie@ncpg.gov.za or warieriaan@gmail.com
Website: www.northern-cape.gov.za/dedat
Enquiries: Mr Hendrik Louw (Director: Regional Economic
Development) Email: hlouw416@gmail.com
Tel: +27 53 802 1638 • Cell: +27 81 323 2533
17 NORTHERN CAPE BUSINESS 2020/21