The UDZ allowance guide offers general guidance on section 13 (quat) of the Income Tax Act and the application of the urban development zone incentive.
The South African Revenue Service (SARS) published Issue 10 of its updated Guide to the Urban Development Zone (UDZ) Allowance on 25 June 2025.
The guide offers general information on the UDZ allowance as set out in section 13quat of the Income Tax Act 58 of 1962. It is intended to assist potential investors and does not cover the detailed technical or legal aspects of the allowance. SARS also clarifies that UDZs should not be confused with special economic zones governed by sections 12R and 12S of the Act.
This publication is not an official publication under section 1 of the Tax Administration Act 28 of 2011 and does not establish a practice generally prevailing under section 5 of that Act. It should not be used as a legal reference and does not serve as a binding general ruling (BGR) under section 89 of the TA Act.
Taxpayers seeking an advance tax ruling or a VAT ruling should refer to the SARS website for application procedures.
The guide includes:
- General guidance on applying and interpreting the UDZ allowance provisions;
- An overview of the tax implications of selling a building previously subject to the allowance or ceasing its use for trade purposes; and
- Details of municipalities with demarcated UDZs and the demarcation process followed.
