Industrial Development Zone (IDZ)

General Information on Industrial Development Zone (IDZ)

Introduction

South Africa抯 broad economic policy includes schemes designed to encourage and promote international competitiveness in the country抯 manufacturing sector. Furthermore, this is set out in government抯 Economic Programme of Action, where Industrial Development Zones (IDZ抯) are sited as a means by which the country will attain increased levels of foreign direct investment in the first economy. This will be achieved primarily through the granting of incentives to attract foreign and local investment within these zones; thereby boosting the country抯 economic attractiveness.

Back to top

The South African Industrial Development Zone concept

The Minister of Trade and Industry may identify an area as suitable for development of an Industrial Development Zone by notice in the Gazette if the Minister is satisfied that designation of the area as an Industrial Development Zone will �

  1. facilitate the creation of an industrial complex having strategic economic advantage;
  2. provide the location for the establishment of strategic investments;
  3. enable the exploitation of resource-intensive industries;
  4. take advantage of existing industrial capacity, promote integration with local industry and increase value-added production;
  5. create employment and other economic and social benefits in the region in which it is located; and
  6. be consistent with any applicable national policies & law, as determined by appropriate environmental, economic and technical analyses.

An IDZ is a purpose built, industrial estate linked to an international air or sea port, which might contain one or multiple Customs Controlled Areas (CCA) tailored for manufacturing and storage of goods to boost beneficiation, investment, economic growth and, most importantly, the development of skills and employment in these regions. A port (air or sea port), is a place appointed or approved by the Commissioner of the South African Revenue Service (SARS) under the Customs and Excise Act, 1964 (Act 91 of 1964) through which goods may be imported or exported.

Back to top

Definitions

For the purposes of Section 21A (1) of the Customs and Excise Act, 1964 (Act 91 of
1964) 揅CA� and 揑DZ� are defined as follows�
�Customs Controlled Area� or �CCA� means an area within an IDZ, designated by the Commissioner in concurrence with the Director General: Trade and Industry, which area is controlled by the Commissioner;
�Industrial Development Zone� or �IDZ� means an area designated by the Minister of Trade and Industry in terms of the Manufacturing Development Act, 1993 (Act No. 187 of 1993);

Back to top

SARS Offerings

The following SARS offerings are available to CCA enterprises.

  • Relief from customs duties at time of importation into a CCA
    • any goods for storage;
    • raw material for manufacture; and
    • machinery used in the manufacturing process.
  • Simplified customs procedures
    • Clearance of goods � importation, exportation and transit
    • Application for designation, licensing and registration
    • Release of cargo
    • Consideration of stage consignments if the requirements are met
    • Consideration of release under embargo
    • Lesser amounts for security � licensing, registration and movement of bonded goods
  • Fiscal incentives on goods when
    • Goods are imported for storage,
    • Raw material imported for manufacture,
    • Machinery imported for used in the manufacturing process; or
    • Any material imported for use in the construction of the CCA infrastructure.
    • Goods are exported from the CCA to a foreign country.
    • Any services are rendered to a CCAE or in the CCA
  • Subsidised infrastructure
    • No import duties payable on goods imported for use in the construction and maintenance of the infrastructure of a CCA in an IDZ (rebate item 498.02).
    • No Value-Added Tax shall be payable when:
      • Goods imported for use in the construction and maintenance of the infrastructure of a customs controlled area
      • Land supplied to a CCAE in the CCA for sale, letting or any other agreement
      • Electricity or water supplied to the IDZ Operator or CCA Enterprise located in the CCA.

Back to top

Activities allowed in a CCA

In terms of the Customs and Excise Act the following activities are allowed in a CCA �

  1. production or manufacture of any goods (other than goods liable to any excise duty, fuel levy or environmental levy), so produced or manufactured in accordance with the provisions of section 75, the item of the relevant Schedule and section 21A and these rules;
  2. production or manufacture of any goods liable to excise duty, fuel levy or environmental levy, be removed to and so used in a licensed customs and excise manufacturing warehouse in accordance with the provisions of the Act; or
  3. storage of imported goods for export, in the same condition as imported or to undergo operations necessary for their preservation or to improve the packaging or marketable quantity or quality or to prepare them for shipment (such as break bulk, grouping of packages, sorting and grading or repacking) before exportation.

Notes:

i). Any goods imported, which are free of duty, may be stored in a customs and excise manufacturing or storage warehouse licensed in the CCA.
ii). CCA VAT goods (local goods) may also be removed from a place in the Republic to a licensed warehouse in the CCA.

Back to top

SARS Legislation

  • Section 21A of the Customs and Excise Act
  • Rules to section 21A of the Customs and Excise Act
  • Schedule 4 to the Customs and Excise Act
  • Schedule 8 to the Customs and Excise Act
  • VAT Interpretation Note 40 dated December 2007

Back to top

Department of Trade and Industry Legislation

Regulations
IDZ Programme Guidelines

Back to top

SARS Application Forms

  • DA185 – Application form: Registration/Licensing of Customs and Excise Clients
  • Designation: Customs Controlled Area (Annexure DA 185.4A11)
  • Registration: IDZ Operator (Annexure DA 185.4A11)
  • Registration: Rebate User (Schedules 3, 4 and 6) � Annexure DA 185.4A3
  • Licensing: Manufacturing Warehouse (Annexure DA 185.4B10)
  • Licensing: Storage Warehouse (Annexure DA 185.4B9)
  • Security Particulars (Annexure DA 185.C)

Back to top

SARS Standard Operating Procedures

  • SC-ST-08 – Stakeholder Discussion Document on IDZ (with annexure)

Back to top

Links