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Posts Tagged ‘ZIMRA’

Increased duties on Motor Vehicles

September 26, 2014 Leave a comment

If you are planning on purchasing a new vehicle, it might be a good idea to do so immediately as duties on vehicles in increasing from November. Chinamasa has proposed an increase of a range of vehicle duties to between 40 percent to 60 percent, in a bid to complement the local motor industry.

he development follows disclosures that government officials, including ministers, were bringing commodities into the country without paying duty. This includes luxury motor vehicles and even food.

The surtax, according to Zimra, will be charged on things such as food stuffs, second-hand light passenger motor-vehicles which are more than five years old from the date of original manufacture, and many other commodities.

Reads the notice in part: “…Surtax of 25 percent of the value for duty purposes shall be charged and paid in respect of the importation into Zimbabwe.

“Included in the goods to be taxed are double cab vehicles for the transport of goods, foodstuffs such as fresh, chilled as well as frozen whole chickens, frozen cuts and offals, milk and cream, yoghurt, fermented milk, buttermilk, cheese, bird’s eggs, potatoes, tomatoes, onions and shallots, garlic, carrots and turnips, mixtures of vegetables, other vegetables, peas (excluding garden peas and marple peas), beans, sausages and similar products, uncooked pasta, jams, fruit jellies, marmalades, soup and broth preparations, sweet biscuits, tomato ketchup and other tomato sauces,” the notice added.

The development comes amid a steep rise in prices of locally-assembled vehicles with most Zimbabweans finding it expensive to buy vehicles locally. Most Zimbabweans, given these challenges, have resorted to importing vehicles from countries such as Japan and many others.

Threats by government to ban the importation of used cars caused an influx of cheap imports which flooded Beitbridge Border Post in the past few months. Analysts believe the introduction of surtax might be a measure to control the massive importation of cars without government necessarily banning the used vehicles import.
Early last year, it was reported that the number of cars coming in through Beitbridge stood at 3 150 in January 2011 as compared to 2 310 in January 2010.

Official figures from Zimra indicated that the number of vehicles imported had gone up significantly since January 2011 due to the fact that many importers delayed delivery last year to benefit from the new rates of duty introduced in January this year.

However, Zimbabwe’s local motor industry is already comatose as most people opt for cheaper second hand vehicle imports.

“The application of this measure will take into account the need to protect consumers from unfair pricing and substandard products. Furthermore, government Departments and parastatals will purchase motor vehicles from the local assembly plants in line with the Directive from the Office of the President and Cabinet issued through Circular Number 16 of 2011,” said Chinamasa.

Categories: General

Tax Break Opportunities in Zimbabwe

March 22, 2014 Leave a comment

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>

Categories: General
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