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Tax relief for investing – Venture Capital Companies
Tax relief for investing – Venture Capital Companies
What is it about?
In the 2008 Budget Review it was announced that access to equity finance by small and medium-sized businesses and junior mining exploration companies is one of the main challenges to the economic growth of these sectors.
Setting aside tax consequences, equity offers some key advantages for small businesses. Equity finance allows for small businesses to weather downturns. Equity also allows small business to use excess cash for reinvestment rather than being forced to use that cash for debt servicing. It has been said that equity is patient capital. Please see our VCC guide for more details: AS-VCC-02 - Reference Guide - Venture Capital Companies.
In order to assist small and medium-sized businesses and junior mining exploration companies in terms of equity finance, a tax incentive is proposed for investors in such enterprises through Venture Capital Companies (“VCCs”). The VCC is intended to be a marketing vehicle that will attract retail investors. It has the benefit of bringing together small investors as well as concentrating investment expertise in favour of the small business sector. Please refer to the Income Tax Act of 1962, Section 12J for more information regarding Venture Capital Companies. For proposed amendments please visit our Draft Legislation for comment page.
To apply:
Email a completed application to vcc@sars.gov.za (Venture Capital Companies Office). You will be contacted once your application has been processed. Click here to download the application form.
NEW! Latest news - 4 November 2009 : First Venture Capital Company approved by SARS!
The SARS VCC office has approved the first VCC in terms of section 12J of the Income Tax Act. In terms of section 12J investors in VCC’s will get the purchase price of VCC equity as a deduction for tax purposes. For a list of the approved VCC’s with contact details, click here!
Enquiries:
Email us on vcc@sars.gov.za (Venture Capital Companies Office).
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