ARTICLE · 11 MARCH 2015

Welcome Boost For Smaller Private Equity Investments

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The Venture Capital Company tax regime is regulated by section 12J of the Income Tax Act, 58 of 1962 which was first introduced 2009 in order to encourage investments into privately owned businesses.

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Bernard Du Plessis

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Welcome boost for smaller private equity investments

The Venture Capital Company ("VCC") tax regime is regulated by section 12J of the Income Tax Act, 58 of 1962 which was first introduced 2009 in order to encourage investments into privately owned businesses. The section specifically aims to help the growth of small and medium sized businesses by increasing their access to equity finance.

There are a number of requirements which must be complied with before a VCC may obtain approval from South African Revenue Service ("SARS") and qualify for the favourable tax regime. For example, it must be resident, its sole object must be the management of investments of qualifying companies as defined, its tax affairs must be in order and it must be licensed in terms of section 7 of the Financial Advisory and Intermediary Services Act, 2002.

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