BUSINESS INCENTIVES & FOREIGN INVESTMENT ALLOWANCE
Get assistance for your business through an array of incentive schemes and SEZ initiatives.
Explore Cape Town’s many attractive assets & incentives
It’s no surprise that South Africa has very large market potential. Ranking 82nd out of 190 economies in the World Bank’s “Doing Business” report (2019), the country has important demography and a diversified, productive and advanced economy. Cape Town, in particular, has many attractive assets to pair with these national strong-points. The region boasts abundant natural resources, a certain political stability and a number of important incentives for businesses, SEZ initiatives and foreign investment.
Investment Incentives in South Africa
The South African government, Western Cape Government and City of Cape Town have established various sector-focused incentive schemes and tax rebates here. This is in order to encourage economic activity on a national, provincial and local level. For example:
- The Foreign Investment Grant provides up to 15 % of the value of new machinery per entity for relocation to South Africa.
- Industrial Development Zones provide duty-free import of production-related materials and zero VAT on materials sourced from South Africa.
- The Skills Support Programme provides up to 50% of training costs and 30% of worker salaries for a maximum of three years. This encourages the development of advanced skills in the region.
- The Strategic Investment Project Programme offers a tax allowance of up to 100% (maximum of USD 86 million per project) on the cost of buildings, plant and machinery (for strategic investments of at least USD 70 million).
- The Critical Infrastructure Facility supplements funds up to 30% of the development costs of qualifying infrastructure projects.
- The Business Process Outsourcing & Off-Shoring (BPO&O) incentives are for companies offering services to offshore clients (between USD 5400-8800 and training support).
- Incentives are in place for industrial projects using unused and new manufacturing assets (for example, green field investments) and expansions of existing industrial projects i.e. 12 % tax incentive.
- Sector Specific Assistance Scheme (SSAS) provides financial support for industry associations, joint action groups and export councils.
- The Film and Television Production Rebate Scheme provides a rebate of 15% for foreign productions and 25% for South African productions.
- The Automotive Production and Development Program (APDP) scheme promotes the automobile industry (20% of the value of investment in productive assets).
SEZ incentives include:
- Preferential 15% Corporate Tax and Tax Relief.
- Building allowance and Tax Relief.
- Employment Tax Incentives.
- Customs Controlled Area Tax Relief.
Business & Industrial Incentives
The City of Cape Town is always finding innovative ways of attracting investment from local and foreign investors. After all, it’s critical that the economy is encouraged to grow and that more job opportunities are created in the region. A sustainable Cape Town with an economic-enabling climate and progressive, dynamic approach to business, is very important to institutions here.
Working with the private sector has become a key pillar and has led to the City’s Investment Incentives Policy. This focuses on using the city’s financial and non-financial incentives to boost investment and to stimulate economic growth, as well as employment creation:
- Non-financial incentives include single-point investment facilitation, development application fast-tracking (five days for completed building plans), three months for completed land-use applications, regularly updated spatial economic information, access to skills development opportunities, as well as biodiversity offsets (currently Atlantis SEZ only).
- Financial incentives include application fee exemptions, discounted development charges, electricity tariff reduction, and broadband connection fee waivers (located within 300m of city network).
New Investment Incentives Policy 2020
The City Council approved the extension of investment incentives in October 2019 to a further six areas in Cape Town, namely:
- Atlantis Industria;
- Triangle Farm;
- Parow Industria;
- Sacks Circle;
- Lansdowne Industrial; and
- Elsies River
The primary objective of the Investment Incentives Policy is to provide investment incentives in areas where there is significant potential for job creating investment but where challenges to investment currently exist.
By targeting specific areas which have met a set of criteria, the City aims to:
- Maximise the socio‐economic return of incentives by focusing on areas with strong potential but which are currently underperforming
- Assist in removing area‐specific blockages to investment or systemic market or regulatory failure
- Enable the achievement of development objectives in specific areas, and
- Assist with addressing issues of spatial inequality
The incentives are made up of non-financial and financial incentives and include:
- Tangible ways where we can help businesses grow
- Prioritised single-point investment facilitation
- Building plan application fast-tracking (5-day turnaround)
- Land use application fast tracking (3 months)
- Occupancy certificate fast-tracking (5 days)
Financial incentives which include the City’s commitment to making financial provision to cover costs. These include:
- Building plan application fee waiver
- Land use application fee waiver
- Development contribution deferral and write off up to R1 million
- Special electricity tariffs for a period of two years.
“I am proud that these incentives add another real mechanism to ensure Cape Town remains regionally and globally competitive, can attract more investment and increase job creation in the metro.”
– Ald James Vos, Mayoral Committee Member for Economic Growth
Want to know more about the incentives in place for investors and enterprises in the Western Cape and Cape Town? Contact us for detailed information!
There are also several incentives in place that truly make this part of South Africa a filmmaker’s dream. From low production costs to favourable exchange rates and many other ways to save on budget, it’s a very attractive location for financing. In fact, it is up to 40% cheaper to make films here than it is in Europe and the USA, and up to 20% cheaper than in Australia. It also offers exemplary services, studios and talent. Additional incentives also include the:
- South African Film and Television Production and Co-Production Incentive
- Foreign Film and Television Production and Post-Production Incentive
- South African Emerging Black Filmmakers Incentive
- Location Film and Television Production Rebate
Want to know more about the incentives in place for investors and enterprises in the Western Cape and Cape Town? Contact us for detailed information!
For more details on investments aids:
www.thedtic.gov.za Connect with our Investment Facilitation Team
