he National Treasury has proposed a 15% corporate income tax rate for businesses in some of South Africa’s special economic zones (SEZs).

In Budget documents, tabled in Parliament by Finance Minister Pravin Gordhan last week, the Minister indicated he would authorise tax incentives in certain SEZs in the country after consultation with Trade and Industry Minister Dr Rob Davies.

The incentives included a tax deduction for employing workers earning less than R60 000/y, as well as an accelerated depreciation allowance for buildings in these areas, which would be based on the existing regime for urban development zones, to encourage investment in industrial premises.

Gordhan stated that government’s expenditure on economic services in 2013/14 would amount to R48-billion, including R5.3-billion for its Manufacturing Competiveness Enhancement Pro- gramme and R2.9-billion for SEZs.

Last year, Cabinet approved the SEZ Bill to replace the country’s Industrial Development Zone (IDZ) programme. However, Davies indicated that IDZs would not be scrapped and would continue to exist as SEZs under the new Bill.

Meanwhile, government also proposed that the R14-million turnover threshold for small business corporations be increased to R20-million and that the graduated tax structure for such corporations be revised.

The current nontaxable income threshold of below R63 556/y, would be increased to below R67 111/y in 2013/14.

Similarly, the next bracket of R63 557/y to R350 000/y, where small businesses currently had to pay 7% in yearly taxes, would move up to between R67 112/y and R365 000/y.

The last bracket, which applied to small businesses that earned more than R350 000/y and currently had to pay 28% of their yearly income to the taxman, would be split in two. Businesses earning between R365 001/y and R550 001/y would have to pay 21% in yearly taxes, while those earning more than R550 000/y would pay 28%.

Overall manufacturing output in South Africa strengthened during the fourth quarter of 2012, but increased marginally by 2.1% during the year, despite relatively strong growth in the petrochemicals, wood and paper, and food and beverages sectors.

Manufacturing production had fallen in industries closely linked to mining.

Gordhan further stated that government’s Manufacturing Competitiveness Enhancement Programme that was announced in 2012 had received a total of 215 applications with requests for grands totalling R2.3-billion. Applicatins were expected to increase in the year ahead and funding of R1.5-billion a year had been approved in the budget of the Department of Trade and Industry.