Income Tax Act, 1962 (Act No. 58 of 1962)Chapter II : The TaxesPart I : Normal Tax12R. Special economic zones |
(1) For the purposes of this section—
means a company—
(a)
| (i) | incorporated by or under any law in force in the Republic or in any part thereof; or |
| (ii) | that has its place of effective management in the Republic; |
| (b) | that carries on a trade in a special economic zone designated by the Minister of Trade and Industry in terms of the Special Economic Zones Act and approved by the Minister of Finance after consultation with the Minister of Trade and Industry for the purposes of this section by notice in the Gazette; |
[Definition substituted by section 30(1)(a) of the Taxation Laws Amendment Act, 2017 (Act No. 17 of 2017) - deemed to have come into operation on 9 February 2016]
| (c) | if the trade contemplated in paragraph (b) is carried on from a fixed place of business situated within a special economic zone; |
[Definition substituted by section 30(1)(a) of the Taxation Laws Amendment Act, 2017 (Act No. 17 of 2017) - deemed to have come into operation on 9 February 2016]
| (d) | if not less than 90 per cent of the income of that company is derived from the carrying on of a trade within one or more special economic zones; and |
[Definition substituted by section 30(1)(a) of the Taxation Laws Amendment Act, 2017 (Act No. 17 of 2017) - deemed to have come into operation on 9 February 2016]
| (e) | that— |
| (i) | was carrying on any trade before 1 January 2013 in a location that is subsequently approved for the purpose of this section as a zone in terms of subsection (3); |
| (ii) | commenced, on or after 1 January 2013, the carrying on, in a location that is approved or subsequently approved for the purpose of this section as a zone in terms of subsection (3), of any trade not previously carried on by that company or any connected person in relation to that company in the Republic; or |
| (iii) | commenced, on or after 1 January 2013, the carrying on, in a location that is approved or subsequently approved for the purpose of this section as a zone in terms of subsection (3), of any trade and that trade— |
| (aa) | comprises of the production of goods not previously produced by that company or any connected person in relation to that company in the Republic; |
| (bb) | utilises the use of new technology in that company’s production processes; or |
| (cc) | represents an increase in the production capacity of that company in the Republic. |
[Definition inserted by section 20(1) of the Taxation Laws Amendment Act, 2019 (Act No. 34 of 2019), GG 42951, dated 15 Janaury 2020] - deemed to have come into operation on 1 January 2019 and applies in respect of years of assessment ending on or after that date (section 20(2)]
means version 7 of the Standard Industrial Classification Code issued by Statistics South Africa;
[Definition inserted by section 26(1)(a) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014) - effective 9 February 2016]
means a special economic zone as defined in the Special Economic Zones Act that is approved for the purposes of this section by the Minister of Finance under subsection (3);
means the Special Economic Zones Act, 2014 (Act No. 16 of 2014).
[Definition substituted by section 26(1)(d) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014) - effective 9 February 2016]
| (2) | [Section 12R(2) deleted by section 34(a) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)] |
| (3) | The Minister of Finance must approve a special economic zone for purposes of this section after taking into account the financial implications for the State should a special economic zone be approved under this section. |
| (4) | Notwithstanding a qualifying company being located in a special economic zone— |
| (a) | a company is not a qualifying company if that company conducts any of the following activities classified under "Section C: Manufacturing" in the SIC Code; |
[Words preceding section 12R(4)(a)(i) substituted by section 34(b) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]
| (i) | Distilling, rectifying and blending of spirits (SIC Code 1101); |
[Section 12R(4)(a)(i) substituted by section 26(1)(g) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014) - effective 9 February 2016]
| (ii) | Manufacture of wines (SIC Code 1102); |
[Section 12R(4)(a)(ii) substituted by section 26(1)(g) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014) - effective 9 February 2016]
| (iii) | Manufacture of malt liquors and malt (SIC Code 103); |
[Section 12R(4)(a)(iii) substituted by section 26(1)(g) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014) - effective 9 February 2016]
| (iv) | Manufacture of tobacco products (SIC Code 12); |
[Section 12R(4)(a)(iv) substituted by section 26(1)(g) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014) - effective 9 February 2016]
| (v) | Manufacture of weapons and ammunition (SIC Code 252); |
[Section 12R(4)(a)(v) substituted by section 26(1)(g) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014) - effective 9 February 2016]
| (vi) | Manufacture of bio-fuels if that manufacture negatively impacts on food security in the Republic; and |
[Section 12R(4)(vi) substituted by section 28(1)(a) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015) - effective 9 February 2016]
| (b) | a company that conducts any activity classified in the SIC Code, which the Minister of Finance may designate by notice in the Gazette is not a qualifying company; or |
[Section 12R(4)(b) substituted by section 34(c) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]
| (c) | a company is not a qualifying company if — |
[Words preceding section 12R(4)(c)(i) substituted by section 34(d) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]
| (i) | more than 20 per cent of expenditure that is deductible under this Act is incurred; or |
| (ii) | more than 20 per cent of the income of that company is received or accrued, |
in respect of transactions with any connected person in relation to that company if that connected person—
| (aa) | is a resident; or |
| (bb) | is not a resident and those transactions are attributable to a permanent establishment of that connected person in the Republic. |
[Section 12R(4)(c) inserted by section 28(1)(c) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015) - effective 9 February 2016]
| (5) | This provision ceases to apply in respect of any year of assessment commencing on or after 1 January 2031. |
[Section 12R(5) substituted by section 18(1) of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021 - deemed to have come into operation on 9 February 2016 (section 18(2)]
[Section 12R inserted by section 43(1) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013) - effective 9 February 2016]