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News & Press: Opinion

Proposed relief to benefit public-private partnership

06 March 2014   (0 Comments)
Posted by: Author: Nicole Paulsen
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Author: Nicole Paulsen (DLA Cliffe Dekker Hofmeyr)

Public-private partnerships (PPPs) generally refer to contracts between a public sector institution/ municipality and a private party, in which the private party assumes substantial financial, technical and operational risk in the design, financing, building and operation of a project. The government will normally be responsible for making the land available so as to support public sector infrastructure projects while maintaining state ownership of the land on which the project takes place.

The success of PPPs is dependent on the financial viability of these projects and incentives and/or deductions for improvements in urban development zones and industrial policy projects. Currently the provisions of the Income Tax Act, No 58 of 1962 (Act) hinder the success of PPPs in that they require ownership of the land before any depreciation or allowances can be claimed for improvements on that land. Accordingly, the private parties who do not own the land on which the projects take place are not entitled to claim any incentives.

Accordingly, the Minister, in the 2014 Budget Speech, proposed that relief be afforded to improve the financial viability of these projects. In addition, the Minister has stated that the requirement of land ownership limits the incentive for improvements in urban development zones and industrial policy projects. The merits of allowing deductions where the taxpayer is not the owner of the land will therefore be considered.

The proposed changes announced by the Minister will bring relief to benefit the private sector participants, while maintaining state land ownership.

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Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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