CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. South Africa To Introduce Venture Capital Tax Incentives

South Africa To Introduce Venture Capital Tax Incentives

by Robert Lee, Tax-News.com, London

22 February 2008


The South African government has proposed new tax incentives for investors in small companies and start-ups, in an attempt to encourage the country's private equity industry to back early stage projects.

It was proposed by Finance Minister Trevor Manuel in his 2008 budget announcement that general venture capital investments (non-mining) would qualify for a 30% up-front deduction, with annual deductions to be capped at R500,000 for individuals, R750,000 for corporations and R7.5 million for venture capital funds.

Junior mining exploration investments would qualify for a 50% upfront deduction, with annual deductions capped at R1 million for individuals, and R10 million for corporations and venture capital funds. This incentive mechanism is also proposed in the place of the flow-through share incentive mechanism for junior mining exploration companies mentioned in the 2007 Budget Review.

In general, the targeted enterprises are high growth and high-tech companies with an annual turnover of up to R14 million or gross assets of up to R7 million. For junior mining and exploration companies, a different threshold – gross assets of R30 million to R50 million – will be considered. The proposed tax incentives will target individual investors, corporate investors and venture capital funds.

Access to equity finance by small and medium-sized businesses has been cited as one of the main challenges to the growth of this important sector of South Africa's economy.

According to the government, while the private-equity industry in South Africa is well developed, the industry’s appetite for start-up, early stage and seed-capital type transactions is low.

A comprehensive report in our Intelligence Report series examining tax-sheltering arrangements for investors, including Venture Capital, Forest Finance, Film Finance, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report5.asp

To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »