Gauteng Business 2016 edition

SPECIAL FEATURE BRICS

SPECIAL FEATURE BRICS South Africa outranks her BRIC counterparts in terms of the overall ease of doing business. China (91st), Russia (112th), Brazil (130th) and India (132nd) are all ranked well below South Africa on the World Bank’s ease of doing business index. Overall ranking THE EASE OF DOING BUSINESS IN SOUTH AFRICA Starting a business Dealing with construction permits Getting electricity Registering property Brazil 130 121 131 60 109 Russia 112 101 178 184 46 India 132 173 182 105 94 China 91 151 181 114 44 South Africa 39 53 39 150 79 Ease of Doing Business — BRICS Countries 2013 SOURCE: WORLD BANK 2013 THE EASE OF DOING BUSINESS IN SOUTH AFRICA Overall ranking Getting credit Protecting investores Paying taxes Trading across borders Enforcing contracts Resolving insolvency Brazil 130 104 82 156 123 116 143 Russia 112 104 117 64 162 11 116 India 132 23 49 152 127 184 116 China 91 70 100 122 68 19 82 South Africa 39 1 10 32 115 82 84 Ease of Doing Business — BRICS Countries 2013 SOURCE: WORLD BANK 2013 GAUTENG BUSINESS 2016 42

Incentives SPECIAL FEATURE As with any growing economy, business incentives are a vital component to getting new projects off the ground, especially during tough economic times. Discover which sectors are most suitable when perusing incentives in Gauteng, a province that prides itself on facilitating development. It must be noted firstly that the South African Government is giving consideration to expanding incentives for labour-intensive projects undertaken within IDZs to stimulate job creation, making that a prime area of investment. Urban Development Allowances For the construction of buildings, investors and firms can benefit from deductible allowances of up to 20 percent of the costs incurred in the development of new buildings or the refurbishment of existing buildings in designated urban development zones. Infrastructure Development In the case of infrastructure investments, a tax deduction of assets owned for the erection of pipelines, transmission lines and railway lines is available to encourage investment in local infrastructure. Public Private Partnerships Tax exemptions are provided for qualifying government grants that are utilised for the improvement of state-owned property. The objective of these exemptions is to encourage the private sector to invest in infrastructure in partnership with the public sector. Tax Incentives Preferential Corporate Tax Rate for Small Business Corporations Small and medium enterprises (SMEs) whose gross annual income does not exceed R14-million, are eligible for income tax deductions. The tax rates applicable to qualifying enterprises vary depending on their level of income. Research and Development Tax deductions of up to 150 percent are available for operational expenditure incurred during the discovery of new information, as well as in developing, designing and inventing programmes of a scientific or technological nature. Depreciation Allowances In the case of commercial buildings, a depreciation of 5 percent per annum is allowed on new or unused buildings, as well as for improvements used in the production of income. To qualify for the depreciation allowance, the building must be owned by a taxpayer. Rolling Stock Depreciation Tax deductions of 20 percent per annum are available for costs incurred in respect of rolling stock (trains, carriages and similar transportation modes) brought into use on or after 1 January 2008. The principal objective of allowable deductions on expenditure on rolling stock is to encourage 43 GAUTENG BUSINESS 2016