ALL FAQs

What is a Venture Capital Company?
It is a company that has satisfied the requirements stipulated in section 12J(5) of the Income Tax Act, No. 58 of 1962 and has been approved by SARS.

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 Large Business Centre 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 [email protected] Post to SARS Large Business Centre Venture Capital Companies 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 48 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. Investors can claim income tax deductions in respect of their investments in approved venture capital companies.

Who qualifies to be an investor?
Any taxpayer (natural person / trust / company) who invests in an approved venture capital company in exchange for venture capital company shares.

Are there any limits to the tax deductions that investors can claim?
Yes. •From 21 July 2019, investments made by natural persons and trusts will be capped at R2.5 million and for companies, investments will be capped at R5 million. This cap is per tax year.

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 shares within a period of five years

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 share certificate that has been issued by an approved venture capital company,

Who qualifies to be an investee?
Any ‘qualifying company’ as defined in section 12J of the Income Tax Act, No. 58 of 1962, as amended, which the approved venture capital company will invest in, in order to own ‘qualifying shares’.

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

What are the consequences of a withdrawal?
An amount equal to 125% of the aggregate amount contributed by investors in exchange for venture capital company shares must be included

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, the company may reapply

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 [email protected] By post: