The SEZ Programme

The ELIDZ is one of the five operational SEZs in South Africa. The South African Industrial Development Zone’s (IDZ) are transitioning into Special Economic Zones (SEZ) a legislative move that aims to support balanced regional industrial growth by fostering the development of more competitive and regional economies.

SEZs are generally defined as geographically designated areas of a country that are set aside for specially targeted economic activities, and supported through special arrangements and systems that are often different from those that apply to the rest of the country. In different countries, SEZs operate through a variety of forms with different functions. They include free ports, free trade zones; industrial development zones (IDZs) and sector development zones.

Benefits of operating within an SEZ

A number of incentives are made available to ensure SEZs growth, revenue generation, creation of jobs, attraction of Foreign Direct Investment (FDI) and international competitiveness. These SEZ incentives include:

  • Preferential 15% Corporate Tax
  • Businesses that are located in a Special Economic Zone may be eligible for tax relief, including the reduced rate of corporate income taxation 15% for the period 2014-2024 (10 years). To qualify, the following conditions must be met:
    • The company must be located in a SEZ that is approved by the Minister of Finance (in consultation with the Minister of Trade and Industry);
    • It must be incorporated or effectively managed in South Africa;
    • At least 90% of the income must be derived from the carrying on of business or provision of services within that SEZ; and
    • The company must not be engaging in the following activities, based on the SIC code issued by Statistics South Africa:

Qualifying businesses operating within approved SEZs (by the Minister of Finance, after consultation with the Minister of Trade and Industry) will be eligible for an accelerated depreciation allowance on capital structures (buildings). The special rate of capital (depreciation) allowances in lieu of normal allowances will be available for erecting or improving buildings and other fixed structures. This rate will equal 10% per annum over 10 years.

Companies engaged in the following activities, based on the Standard Industrial Classification (SIC) code issued by Statistics South Africa, will not qualify for the building allowance:

  • Spirits and ethyl alcohol from fermented products and wine (SIC code 3051)
  • Beer and other malt liquors and malt (SIC code 3052)
  • Tobacco products (SIC code 3060)
  • Arms and ammunition (SIC code 3577)
  • Bio-fuels, if their manufacture negatively impacts food security in South Africa

All employers employing low-salaried employees (below R60 000 per annum) in any SEZ will be entitled to the employment tax incentive. This is an incentive aimed at encouraging employers to hire young and less experienced work seekers. However, the employee age restriction will not apply for SEZs. It reduces an employer’s cost of hiring people through a cost-sharing mechanism with Government, while leaving the wage the employee receives unaffected. The employer can claim the ETI and reduce the amount of Pay-As-You-Earn (PAYE) tax payable by the amount of the total ETI calculated in respect of all qualifying employees.

Eligible companies will have to first satisfy the requirements contained in the Employment Tax Incentive Act, 2013 (Act No. 26 of 2013). The employment tax incentive guide can be found on the SARS website:

Customs and excise incentive Goods imported into a customs controlled area (CCA) situated in an SEZ are relieved from applicable import customs, excise duties and economic restrictions whilst stored and undergoing manufacturing (which includes processing, cleaning and repair) within the CCA. Goods manufactured in the CCA and subsequently supplied to the local domestic market are subject to the payment of the import customs and excise duties that were relieved at time of importation on the imported goods (raw materials). The liability for customs and excise duties, which enjoyed relief on imported goods used in manufacturing in the CCA, cease upon subsequent export.

Only enterprises located within a CCA of an SEZ are eligible for the relief from import customs and excise duties on goods imported into the CCA. The relief amounts to a full rebate of import customs and excise duties on all goods imported into a CCA by a CCA enterprise.

This means that the payment of customs and excise duties on any goods imported into a CCA in an SEZ would be suspended, translating to a significant cash flow benefit for any enterprise located there. This has been accomplished by the creation of a specific rebate provision in the customs and excise legislation, that is, rebate item 498.01.

How to access these benefits A CCA enterprise that intends to import and export goods must register with SARS as an importer and exporter. A CCA enterprise that intends to utilise rebate item 498.01 must also register with SARS as a rebate user. Application for the registration as a rebate user may be done simultaneously with the application for registration as an importer or exporter.
Application for registration must be made on Form DA 185 and its relevant annexures. Particular note must be taken of the supporting documents and information that must be submitted to SARS as specified in the application form. This form and further information can be found on the SARS website (

Investors/ tenants within a customs controlled area of a Special Economic Zone are eligible for tax relief as per the Value-Added Tax Act, 1991 (Act No. 89 of 1991), the Customs and Excise Act, 1964 (Act No. 91 of 1964), the Customs Duty Act 2014 (Act No. 30 of 2014) and the Customs Control Act, 2014 (Act No.31 of 2014).

  • A Greenfield project (new project);
  • A Brownfield project (expansion or upgrade); or
  • Classified under ‘Major Division 3: Manufacturing in the Standard Industrial Classification of All Economic Activities (“SIC”) 5th Edition or SIC 7th Edition, Section C: Manufacturing.


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