ANNOUNCEMENT 12 Apr 2012

The government of South Africa approved a tax incentive for Sasol Chemical Industries Ltd as part of the Tax Allowance Program.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

Government Gazette. The Republic of South Africa. Volume 562, No. 35253 of 12 April 2012. Department of Trade and Industry. Notice 309 of 2012. Available at: https://www.greengazette.co.za/notices/income-tax-act-no-58-of-1962-section-121-tax-allowance-programme_20120412-GGN-35253-00311

Department of Trade and Industry. Section 12I Tax Allowance Incentive (12I TAI). Available at: http://www.dti.gov.za/financial_assistance/docs/12I_TAI_Information.pdf

Inception date: 12 Apr 2012 | Removal date: open ended

Tax or social insurance relief

On 12 April 2012, the Department of Trade and Industry (DTI) of South Africa issued Notice 309 announcing the approval of an application made by Sasol Chemical Industries Ltd for the 12I Tax Allowance Programme. As a result, the investment allowance granted to the local chemical company which is deductible from taxable income is ZAR 350 million (circa USD 44.6 million), and the training allowance is circa ZAR 3.4 million (circa USD 431,000). The Ministry estimates the foregone revenue to be ZAR 155,162,602 (USD 23 million).

The DTI has stated that from the company's total investments estimated at ZAR 8,020 million (USD 1,016 million), the manufacturing qualifying assets accounted for ZAR 1,626 million (USD 206 million). Due to the specific characteristics of the project, the DTI classified this investment as a Brownfield project.

The purpose of the investment is to manufacture medium and hard wax and paraffin.

Section 12I Tax Allowance Incentive
The 12I Tax Incentive seeks to promote Greenfield and Brownfield investments with the objective to boost the productivity of the South African manufacturing sector and increase the productivity of the human capital.

The minimum investment required in qualifying assets is ZAR 50 million for a greenfield project (projects that use only new and unused manufacturing assets) and an additional investment of ZAR 30 million for a brownfield project (expansions or upgrades of existing industrial complexes). 

The total investment allowance range between 35% and 55% (or ZAR 350 million and ZAR 900 million) depending on the type of the investment, the status classification, and the localization.

AFFECTED SECTORS

 

AFFECTED PRODUCTS