SEZs will make SA more competitive

South Africa’s Industrial Development Zones may soon become more competitive through the introduction of tax incentives to attract investment. Since their inception, the IDZs have had to compete globally against similar investment destinations that offer a raft of incentives, which include a range of tax holidays for both companies and personnel. In his 2013 budget speech last week, Finance Minister Pravin Gordhan announced that the Special Economic Zone (SEZ) programme announced in 2012 had received R2.9 billion in funding to “build world class industrial parks”. “I am in discussion with Minister Davies on specific tax incentives to enhance this initiative,” he added. The IDZs will not have the playing field to themselves, as the proposed SEZs can be set up anywhere in the country. There will, in effect, be SEZs within the IDZs. The Dube Trade Port and Coega and East London IDZs are, however, probably in the strongest position in terms of existing infrastructure and systems to apply for SEZ status. According to the Coega Development Corporation (CDC) spokesperson Ayanda Vilakazi, firms in these zones will enjoy a 15% corporate income tax rate and will also benefit from an employment incentive which Treasury plans to introduce and which will allow a tax deduction for employment of workers earning less than R60 000 per year. “It was always the plan of the Department of Trade and Industry to implement monetary incentives – largely in response to long-standing pleas from regional Industrial Development Zones. As the CDC, we are pleased to note that the government is embarking on a path to have government support mechanisms in place that will assist in the quest to enhance investor uptake,” he said in reaction to the announcements in the budget. “The incentives are directed at companies and investors who locate in the new SEZs – and the CDC is part of a national SEZ implementation team which is working on the details of how the transition will take place,” Vilakazi added. CAPTION Coega, The Dube Trade Port and East London are probably in the strongest position to apply for SEZ status.