Section 12J Funds

Who should start a Section 12J VCC?

South African taxpayers who are looking to invest into South African companies or projects should consider forming a Section 12J Venture Capital Company (VCC) given the significant tax incentive they would receive.

Examples of some of the sectors/areas within which VCCs have been implemented successfully include:

• renewable energy
  • commercial and residential roof top solar solutions
  • large PV projects
  • wind energy projects
• franchises
• mining – junior mining
• hospitality
  • student residence developments
  • hotel developments
• private equity firms & family offices
• movable property leasing

VCCs can invest across most sectors except:

• property, unless in the hospitality sector as defined in the Income Tax Act (this definition generally includes hotels, serviced apartments and student residence)
• any trade carried on in the financial services sector (i.e banking, insurance etc)
• any trade carried on in respect of financial or advisory services
• gambling, liquor, tobacco, arms or ammunition