Treasury compromises on its tax plans for venture capital companies
The treasury has made some far-reaching concessions regarding its tax proposals for venture capital companies. The industry expressed strong opposition to the proposals contained in the draft Taxation Laws Amendment Bill, saying that it would kill off the use of the tax incentive provided in the Income Tax Act for venture capital investments. The proposals were intended to address perceived abuse of the tax incentive. They would have required that the venture capital company and the company in which it invests (the qualifying company) have only one class of shares and that this apply retrospectively from the year of assessment during which the company started trading and any time after that. Another proposal was that trading between the investor in the venture capital company and the qualifying company be prohibited. Treasury chief director Yanga Mputa told parliament’s finance committee on Wednesday that the treasury had accepted or partially accepted the industry’s comments on the...
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