When I was more than an average athlete and trained with a more purpose than I do now, I would hear the only too familiar words of my coach: “Be in the zone.”

In what zone, you might ask. The ‘zone’, in athletics, is the state in which an athlete performs to the best of his or her ability. It is considered a magical and special place where performance is exceptional and consistent, automatic and flowing. As an athlete, you are able to ignore all the pressures and allow your body to deliver its ultimate performance.

In the South African landscape, there is a zone – no, I mean zones. There are industrial development zones (IDZs), free trade zones, sector development zones and special economic zones (SEZs). Then there is what is called a free port – it, too, can be considered part of the ‘Zone’ family, although its does not have the famous ‘family name’

According to the Department of Trade and Industry (DTI), SEZs are geographically designated areas set aside for targeted economic activities, supported through special arrangements (that may include laws) and systems that are often different from those that apply in the rest of the country. From a customs perspective, these are commonly known as ‘customs enclaves’, which means that the customs dispensation in the zones differs from that applicable in the rest of the country.

The 2014/15 to 2016/17 Industrial Policy Action Plan (Ipap) identifies SEZs, which may be sector specific or multiproduct, as key contributors to economic development and as the growth engines driving the South African government’s strategic objectives of industrialisation, regional development and employment creation.

The SEZ Act No 16 of 2014, assented to on May 16 and published in the Government Gazette of May 19, lists the following categories of SEZs: IDZ, free port, free trade zone and sector development zone.

An IDZ is a purpose-built industrial estate that leverages domestic and foreign fixed direct investment in value-added and export-orientated manufacturing industries and services. There are five operating IDZs in South Africa, namely the Coega IDZ, the Richards Bay IDZ, the East London IDZ, the Saldanha Bay IDZ and the Dube trade port.

A free port is a customs-duty-free area adjacent to a port of entry where imported goods may be unloaded for value-adding activities within a SEZ for storage, repackaging or processing, subject to customs import procedures.

A free trade zone is a customs-duty-free area offering storage and distribution facilities for value-adding activities within a SEZ for subsequent export.

A sector development zone is a zone focused on the development of a specific sector or industry through the facilitation of general or specific industrial infrastructure and incentives as well as technical and business services primarily for the export market.

The objectives of the SEZ Act are, in essence, to determine SEZ policy and strategy; to establish an SEZ advisory board and an SEZ fund; to ensure proper designation, operation, promotion, development and management of SEZs; to enact regulatory measures and incentives for SEZs in order to attract domestic and foreign direct investment (FDI); and to establish a one-stop shop to deliver government services within the zone.

According to the SEZ Act, a number of incentives will be available to ensure SEZ growth, revenue generation, the creation of jobs and the attraction of FDI as well as international competitiveness. This, it is envisaged, will be achieved through a 15% corporate tax, a building allowance, employment incentives, customs-controlled areas and a 12i tax allowance. (Section 12I of the Income Tax Act provides for a tax allowance programme based on investment in new manufacturing assets and training, provided for employees in the project. The 12I tax incentive aims to accelerate economic growth in the industrial sector and support Ipap 2, particularly in terms of job creation, training and energy efficiency. The two components of the programme comprise an investment allowance of up to R900-million and a training allowance of a maximum of R30-million per project, depending on compliance with certain criteria. Both allowances are deductible from the taxable income of the applicant company, thereby reducing their tax liability.)

SEZ Rule
On November 11, the South African Revenue Service (Sars) published draft Rule 21A of the Customs and Excise Act No 91 of 1964 (provisions for the administration of customs-controlled areas within IDZs) for comment by November 28. The notification contained a brief explanation which read: “The draft rules relate to the substitution in the rules for section 21A of ‘IDZ’ for ‘SEZ’.”

Public Officer Rule
On November 14, Sars published draft Rule 59A of the Customs and Exercise Act (registration of persons participating in activities regulated by the Act) for comment by November 28.

The draft amendment proposes that a public officer be appointed by the company and approved by Sars in terms of Section 246 (Public officers of companies) of the Tax Administration Act, 2011, who may apply for registration on behalf of a company if duly authorised by that company.

Tariff Chapter 99
On November 14, Sars published draft tariff amendments in Tariff Chapter 99 in Part 1 of Schedule No 1 to the Act (personal and household effects) for comment by November 28. This draft amendment proposes the insertion of Additional Notes 9 and 10 in Tariff Chapter 99, the substitution of the descriptions of tariff subheadings 9999.00.10 and 9999.00.20 and the insertion of ‘kg’ as the statistical unit.

The draft amendment is intended to ensure that personal and household effects, new or used, can be either imported or exported under the same commodity code in Schedule No 4 of the Act (general rebates of customs duties, fuel levy and environmental levy).

Tariff Chapter 99 is a South African-specific tariff chapter, along with Tariff Chapter 98 (original-equipment components).

2015 Tariff Amendments
The publication of the 2015 customs tariff amendments, the majority of which will be effective January 1, 2015, is expected toward the end of November 2014.