ALL FAQs

What is a Venture Capital Company?
It is company that has satisfied the stipulated requirements and has been approved by SARS.

What is the purpose of the Venture Capital Company incentive?
To assist small and medium-sized businesses and junior mining companies in terms of equity finance. The incentive aims to encourage Investors to invest in approved Venture Capital Companies (VCCs),

How can a company apply for a Venture Capital Company status?
An application (VCC001) form is available on the SARS website. The form must be completed and submitted to the SARS – Legal Counsel Division together with the required relevant material.

How and where must the application form be submitted to?
The signed application form and relevant material can be submitted via the following methods:Email to vcc@sars.gov.za Post to SARS Legal Counsel Legal Advisory: Specialist Support Private Bag X170 Rivonia 2128

What happens after the application form has been submitted?
SARS will assess the application form to determine if the company meets the requirements.If the application is successful, a Venture Capital Company reference

What are the preliminary requirements to be met to become an approved Venture Capital Company?
A company must meet all the following preliminary requirements to qualify for an approved Venture Capital Company status for each year of assessment

Are there any additional requirements to be met by an approved Venture Capital Company?
Yes. The company must satisfy the following additional requirements after the expiry of 36 months commencing on the first date of the issue of venture capital share:

Are there any tax benefits to the Venture Capital Company incentive?
Yes. Qualifying investors can claim income tax deductions in respect of their investments in approved Venture Capital Companies.

Who qualifies to be an investor?
Any taxpayer who invests in an approved Venture Capital Company in exchange for Venture Capital Company Shares.

Who is an investor?
Any taxpayer who invests in approved Venture Capital Company's in exchange for investor certificates.

Are there any limits to the tax deductions that investors can claim?
Yes. The previous limits have been withdrawn as of 1 January 2012, and replaced with the following: - Where any loan or credit is used to finance the acquisition of a venture capital share and remains owing at the end of the year of assessment,

How is the deduction recouped?
The deduction is recouped (under the general recoupment rules of section 8(4) of the Income Tax Act, 1962), if a taxpayer disposes of the Venture Capital Company share(s) within a

How does an investor support the claim for a deduction?
On request from SARS, the investor must verify a claim for a deduction by providing a Venture Capital Company Investor Certificate

Who qualifies to be an investee?
Any company that meets all of the following requirements will qualify as an investee: The company must be a resident;The company must not be a controlled group company in relation to a group of companies

Who is the investee?
Any qualifying company which the approved Venture Capital Company will invest in order to own qualifying shares.

Are there any special tax benefits for investees?
No. The standard tax rules will apply.

Can an approved Venture Capital Company status be withdrawn by SARS?
Yes. Non-compliance with the following will trigger a withdrawal of an approved VCC status -If, during any year of assessment, after the approval of the Venture Capital Company status, the company

Will SARS allow the Venture Capital Company a grace period to rectify the non-compliance?
Yes. - A written notification will be issued to the Venture Capital Company stating the requirements that have not been met and the period allowed

What happens if the Venture Capital Company fails to rectify the non-compliance?
If the approved Venture Capital Company does not take the acceptable corrective steps within the period specified in the written notice from the SARS office, the approved Venture Capital Company status will be withdrawn from

What are the consequences of a withdrawal?
An amount equal to 125% of the aggregate amount contributed by the qualifying investor(s) in exchange for Venture Capital Company shares must be included in

Can a company voluntarily apply for a withdrawal of their Venture Capital Company status?
Yes. The request for withdrawal must be submitted in writing and must include the following information: - The Venture Capital Company reference number or Income Tax reference number; and - Reason(s) for withdrawal.

Can a company reapply for a Venture Capital Company status?
Yes. If the company takes the corrective steps to rectify the non-compliance that resulted in the withdrawal of the Venture Capital Company status in the year

Are there any special tax benefits for Venture Capital Company’s?
No. The standard tax rules will apply.

Who can I contact for enquiries relating to the Venture Capital Company scheme?
If you have any enquiries regarding Venture Capital Companies, you can contact SARS as follows: By email vcc@sars.gov.za By post:

Last Updated: 12/02/2016 12:19 PM     print this page
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