Home > General > Tax Break Opportunities in Zimbabwe

Tax Break Opportunities in Zimbabwe

Like many other developing countries, Zimbabwe offers a number of tax and customs incentives in the form of <strong>tax holidays, reduced tax rates, and accelerated depreciation</strong>. Revenue incentives in Zimbabwe apply equally to both domestic and foreign investors and the major goals of incentives in place are:
<ol style=”list-style-type:lower-alpha;”>
    <li>Income generation</li>
    <li>Export promotion</li>
    <li>Employment creation and skills transfer</li>
    <li>Small business development</li>
    <li>Industrial development</li>
    <li>Revenue inflows</li>
</ol>
The incentives are given by sector, type of activity, form of organization, and geographical location of investment as follows:
<h3>
<h3><strong> </strong></h3>
Tourism Sector</h3>
<ol style=”list-style-type:lower-alpha;”>
    <li>Operators of tourist facilities in approved Toursit Development Zones enjoy preferential treatment.</li>
    <li>Taxable Income is taxed at 0% for the first 5 years</li>
    <li>Taxed at 25% after the 5 year tax holiday</li>
</ol>
<strong> </strong>

<strong>Preferential Zones- Growth Point Areas</strong>
<ol style=”list-style-type:lower-alpha;”>
    <li>Preferencial area are areas declared to be growth point areas</li>
    <li> Promotes equitable development of the country’s provinces.</li>
    <li>Taxable Income of person engaged in new <strong>manufacturing project in growth point area is taxed at a special rate of 10%.</strong></li>
    <li>Taxable Income of person engaged in <strong>new project providing infrastructure in growth point area is taxed at 15%.</strong></li>
    <li>Can also claim Special Initial Allowance on construction of commercial buildings</li>
    <li>Qualifies for a further deduction of an Investment allowance equal to 15% of the cost of new commercial or buildings, or staff housing erected, additions or alterations to existing commercial or industrial buildings or staff housing and new or unused articles, implements and machinery used in a growth point area.</li>
</ol>
 

 <strong>Manufacturing Companies</strong>
<ol>
    <li>Taxable income from manufacturing or processing<strong> company which exports 50% or more of its output taxed at a special rate of 20%.</strong></li>
<strong></strong></ol>
 <strong>Build Own Operate and Transfer (BOOT) and BOT Arrangements</strong>
<ol style=”list-style-type:lower-alpha;”>
    <li>Contractors may enter into contracts with state or Statutory Corporation under which he undertakes to construct infrastructure for the state or statutory corporation</li>
    <li>This will be in consideration for the right to operate or control for a specified period after which the contractor will transfer ownership or control of the item to the state or statutory corporation</li>
    <li>Enjoys tax holiday for first 5 years</li>
    <li>Taxed at 15% for the second five years</li>
</ol>
<strong> </strong>

<strong>Industrial Park Developer</strong>
<ol style=”list-style-type:lower-alpha;”>
    <li>Special provisions have been made for industrial park developers.</li>
    <li>These are persons who own and maintain industrial parks, that is, approved premises or an area in which any person other than the industrial park developer, carry on business of manufacturing or processing goods or components of goods for export from Zimbabwe.</li>
    <li><strong>Enjoys a tax holiday for the first 5 years.</strong></li>
    <li>Thereafter taxed at a tax rate of 25%.</li>
    <li>Not liable to tax from dividends paid to residents or non-residents.</li>
    <li>Also exempt from withholding tax on interest and fees payable to non-residents</li>
    <li>Disposal of specified assets forming part of the or connected to the industrial park is exempt from Capital Gains Tax</li>
</ol>
 

<strong>Mining Companies</strong>
<ol style=”list-style-type:lower-alpha;”>
    <li>Mining companies enjoy a special flat tax rate of 15% when compared to the standard rate of tax of 30%.</li>
    <li>All capital expenditure on exploration, development, and operating incurred wholly and exclusively for mining operations is allowed in full</li>
    <li>There is no restriction on carryover of tax losses; these can be carried forward for an indefinite period.</li>
    <li>Special Initial Allowance on capital equipment is allowed at a rate of 100%</li>
    <li>Taxable income of a holder of special mining lease is taxed at a special rate of 15%.</li>
</ol>
 

<strong>Exporters Incentives</strong>
<ol style=”list-style-type:lower-alpha;”>
    <li>Export Market Development Expenditure: This is a double deduction available to operators.</li>
    <li>This is in respect of non capital expenditure incurred wholly or exclusively for purposes of seeking opportunities for the export of goods from Zimbabwe or for creating or increasing the demand of such exports</li>
</ol>
 <strong>Farmers Special Deductions:</strong>
<ol style=”list-style-type:lower-alpha;”>
    <li>Farmers are allowed special deductions over and above the normal deductions.</li>
    <li>Examples include expenditure on fencing, clearing and stamping land, sinking boreholes and wells and on aerial and geophysical surveys</li>
</ol>
These incentives are another reason why investing in Zimbabwe is worth thinking about. Imagine taking a tax holiday for 5 years!! That would be great.

<em>Inforation taken from Zimra website. Author does not assume any legal liability or responsibility for the incompleteness of the information or any loss, damage or legal consequences that may arise due to information contained on this website.</em>

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