• Special economic zone programme and attracting FDI

Special economic zone programme and attracting FDI

20 February 2019

In line with Mr Ramaphosa’s commitment to attract foreign direct investment (FDI) through, amongst other things, making South Africa more business-friendly, the revision of anomalous provisions of certain tax incentives, aimed to promote investment, is welcomed. Hopefully the revision of tax provisions that contradict the stated intention of the Special Economic Zone (SEZ) programme will address one of the anomalies. This relates to scenario’s where companies in SEZs claim wear and tear allowances on assets against a reduced income tax rate of 15%. However, when the SEZ tax relief ceases and the Corporate Income Tax rate reverts to 28, the company needs to recoup at 28% (or 13% more) when the assets are sold.

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