The Treasury’s proposed amendments to the tax incentive for venture capital companies is tantamount to using "a sledgehammer to kill a mouse", a tax expert warns. The incentive aims to encourage investment in small-and medium-sized businesses, but the Treasury says this has been abused. Treasury chief director of legal tax design Yanga Mputa said the proposed measures in the Draft Taxation Laws Amendment Bill were intended to stamp out this abuse. PricewaterhouseCoopers tax policy leader Kyle Mandy described the measures as using "a sledgehammer to kill a mouse". Some will apply retrospectively, with heavy financial consequences for noncompliant companies. The Treasury gave a hint that the tax incentive under section 12J of the Income Tax Act would be tightened in the 2018 budget review, which noted that there had been a substantial increase in the take-up of the incentive. "From only one in 2008 there are now more than 90 registered venture capital companies, with total investments...
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