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Mbeki Announces Billions In Tax Incentives For South African Industry

by Robert Lee, Tax-News.com, London

12 February 2008


South African President Thabo Mbeki has announced that the government will invest billions more rand in tax breaks for the industrial sector, as part of its strategy to diversify the South African economy.

In his State of the Nation address at the opening of Parliament last week, Mbeki explained that the tax incentives would support the government's Industrial Policy Action Plan finalised by the Department of Trade and Industry last year.

"In this regard, R2.3 billion has been budgeted for industrial policy initiatives and a further R5 billion in tax incentives over three years will support industrial policy," the President revealed.

Under the Action Plan, there will be fast track implementation of development in four key sectors of the South African economy, namely capital equipment and metals; automotive and components; chemicals and pharmaceuticals; and forestry, pulp and paper.

It is thought that the extra tax breaks could boost the Industrial Development Zones at Coega and East London, which had been arguing for more IDZ-related tax breaks.

Mbeki went on to tell Parliament that at the macro-economic level, the government will continue to "maintain a fiscal posture that supports continued economic growth and development and reducing our external vulnerability".

Also, in what is being seen as another potential boost for inward investment, the President mentioned plans for the establishment of a call centre, through which the government and investors could track the process of environmental impact assessments, land acquisition and infrastructure that “can at times make or break investor decisions”.


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