Progress on Special Economic Zones 19 August 2014. Presentation to the Portfolio Committee. Policy on the development of SEZs in South Africa (2012).
The Special Economic Zones policy aims to position Special Economic Zones as an effective tool for industrial development, and is flexible and rigorous enough to be responsive to the development needs of all regions, as well as the needs of investors and other key role-players.
The modest performance of the IDZ programme can be attributed to:
SEZ Act: Chapter 7 Section 41 -The Minister may, after consultation with the Advisory Board, make regulations and publish a draft in the Gazette for written submissions over a period of 30 days
End August 2014: Final Draft for Internal Consultation: dti/NT/SARS, existing IDZs, Provinces, NEDLAC
End September 2014: Regulations ready for gazetting
October 2014: Proposed Regulations gazetted, 30 days public comment, consideration and consultation with Advisory Board
November 2014: Regulations Finalised and Gazetted
April – June 2014: Preparation of draft Regulations – First draft
July 2014: Initial discussions with main government stakeholders: SARS (Customs, VAT, Corporate Tax) and National Treasury.
Narrowed areas requiring further consensus:
SEZ Fund – its design, capitalisation and administration
SEZ Incentives – how to reference in the Regulations, how to refer to governing legislation
Definitions of SEZs – correct wording that corresponds to SARS Customs legislation
SEZ Act: Chapter 3, Sections 7 -19.
The Minister must appoint 15 persons as members of the Advisory Board, as prescribed by the Act
April – June 2014: Preparation for appointment
July 2014: Identification of ex officio members, design of appointment process (7.2, ss. h & i), preparation of advertisement
August 2014: Advertisement in daily newspapers – 10 August 2014
End August 2014: FinaliseBoard Remuneration
End September 2014: FinaliseToR, Board Charter, Induction Pack, conduct interviews
October 2014: Appoint Board
SEZ Act: Chapter 4 Section 21.
The Minister may, determine and implement support measures, including incentive schemes, for operators, and businesses operating within Special Economic Zones.
1. Lower Corporate Tax rate of 15% for qualifying companies locating in an SEZ
2. Employment Incentive: For employees earning lower salaries in the SEZ – no age limit.
3. Accelerated depreciation Allowance for Buildings in the SEZs: New building to be depreciated for 11 years at 20% in the first year and 8% thereafter. Improvements to buildings to be depreciated at 20% p.a.
4. Customs Controlled Area (CCA): VAT Exemption and duty free area
5. 12i Tax Allowance: Up to 100% tax allowance for green and brownfield projects in the SEZ (for preferred status) and up to 75% allowance for projects in the SEZ if they are qualifying status
The Tax incentives’ effective date will coincide with that of the SEZ Act.
In accordance with SEZ Act Chapter 7 Section 39 (3), (5),
Consultations are under way with relevant IDZs and provinces to agree on a suitable approach to transition IDZs to SEZs within 3 years
In the process of: