Tax incentives in special economic zones
WHILE the government was trying to offer support to businesses by providing incentives, some business owners did not know about these incentives and were unable to access them to ease their financial burden.
Cova Advisory and Associates joint manager Duanne Newman said incentives were supposed to be built into a company’s decision-making process.
“If the owner of a company wants to make an investment, they would need an incentive to do it. Incentives have an additionality and causality link in a business. But if they don’t know about them, they could potentially not make the investment, while the incentive could make the difference.”
Newman, who has been working with many Black Industrialists Programme (BIP) companies, said business owners generally wanted to focus on setting up their business, employing people and running the business rather than going through the processes to receive the incentives.
Another challenge was that the documents linked to the incentives were generally codified in tax law. While the government had attempted to simplify the processes, it was necessary for the incentives’ providers to engage with those the incentives were meant for, he said.
In July, the Dube Tradeport Corporation announced that qualifying companies within the Dube TradePort Special Economic Zone were eligible to access Special Economic Zone incentives, after Finance Minister Nhlanhla Nene published his approval of 12R and 12S in the Government Gazette. This added to the investment appetite in the flurry of activity taking place within the zone, where work was under way with the development of Dube TradeZone 2, which opened up a further 45 hectares for development.
Among the incentives that companies could claim with this approval by Nene, included the accelerated depreciation allowance on capital structures, which was a tax rebate on the investment a company makes in the buildings it operates from.