Incentives Applicable to Investors

The investment incentives administered by the authority differ from one industry to the other as highlighted below. These apply to both local and foreign investors save for the immigrant’s rebate which applies to individuals coming to reside in Zimbabwe.

1. GROWTH POINT

The incentives are aimed at promoting or encouraging business to invest in growth point areas. These include:

  • New manufacturing project for the first 5 years is taxed at 10%
  • Thereafter taxed at 30%
  • New infrastructure at growth points is taxed at 15% for the first 5 years
  • New infrastructure at growth points is taxed at 15% for the first 5 years
    • Investment allowance of 15% on cost of:
      • Construction of, or additions or alterations to, Commercial or industrial buildings or staff housing.
      • New or unused articles, implements, machinery and utensils excluding motor vehicles intended or adapted for use on roads.
  • Businesses can claim an allowance known as Special Initial Allowance (SIA) on the construction of commercial buildings.
  • Fifty percent SIA is claimed in the first year with the remaining 50% spread over the following two years, claimed as 25% accelerated wear and tear for each year.

2. BUILD OWN OPERATE TRANSFER (BOOT)

This is where a contractor enters into contract with the State or the Statutory Corporation under which the contractor undertakes to construct an item of infrastructure for the State or a Statutory Corporation 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.

The incentive in this sector is;

  • A tax holiday for the first 5 years
  • Income tax at the rate of 15% for the second five years
  • 20% for the third five years
  • Thereafter tax is paid at the rate of 30%.

3. EXPORT INCENTIVES

3.1Export Incentives

Zimbabwe allows duty-free importation of raw materials for the manufacture of goods for export.

Provision exists for drawback of certain duties applicable to imported goods, raw materials and components used in manufacturing, processing or for export under the Inward Processing Rebate Scheme;

Export permits/licences are only required for a limited range of items, mainly strategic agricultural commodities like cotton, fish, fertilizer, seed, maize and potatoes. These are obtainable from the Ministry of Lands and Agriculture.

Taxable income from manufacturing or processing company that exports fifty percent or more of its output is taxed at a reduced rate of 20%.

3.2 EXPORT PROCESSING ZONES

An Export Processing Zone (EPZ) means any part of Zimbabwe declared in terms of the EPZ Act (Chapter 14:07) to be an export processing zone.

The holder of an investment licence issued in terms of the export Processing Zone Act, (licence investor) is granted the following incentives:

Concessions in relation to approved zones include:

  • Income taxed at 0% for the first five years of operation.
  • Thereafter the income is taxed at 15%.
  • Exemption from capital gains tax.
  • Exemption from no resident and resident shareholder’s taxes, non residents taxes on interest, fees, royalties and remittances.
  • Rebate of duty on capital equipment imported for use export processing zones.
  • Value Added Tax on goods and services is refundable.
  • Fringe benefits earned by employees of licenced investors operating in export processing zones are exempt from income tax. The exemption on fringe benefits is to be restricted to 50% of an employee’s taxable income.

3.3 Export Market development Expenditure

This is double deduction available in respect of non-capital expenditure incurred in the process of seeking new opportunities/markets for the export of goods (not services) from Zimbabwe, or of creating or increasing the demand for such products.

4. INDUSTRIAL PARK DEVELOPER

An industrial park developer is a person who owns and maintains an industrial park.

An industrial park is a premise or area, other than an export processing zone, in which two or more persons, other than the industrial park developer, carry on the business of manufacturing or processing goods or components of goods for export from Zimbabwe.

The incentives are: -

  • Exemption from paying income tax for the first five years.
  • Thereafter income will be paid at 10%.
  • Exemption from payment of residence shareholder’s tax, non resident’s shareholder’s tax, interest fees.
  • The disposal of specified assets forming part of connected to the industrial park is exempt from capital gains tax.

5. OPERATORS OF TOURIST FACILITIES

Tourist facility operators in approved development zones enjoy the following benefits:

  • The first five years are exempt.
  • Taxed at 15% after the first five-year tax holiday.
  • Taxed at 20% after the first 10 years.>
  • Rebate of duty on approved capital goods imported for use in tourist development zones.

6. APPROVED PROJECT

Approved projects enjoy the following rebates:

  • Rebate of duty on goods imported temporarily for an approved project.
  • Rebate of duty on goods for incorporation in the construction of approved projects. These should form a permanent of a finished project.

7. FARMERS

Investors into farming are allowed full deduction of expenditure incurred on;

  • Fencing, clearing and stumping lands, works for prevention of soil erosion, boreholes, wells, aerial and geophysical surveys.
  • Restocking allowance
    • This is an allowance given to cost of restocking a herd which would have been depleted by forced sales or deaths during a drought proclaimed period. Given that the original cost of purchases is allowed in full, this thus allows a deduction of a further 50% of such cost.
  • Rebate of duty on materials to be used in the preparation and packaging of fresh produce for export.

8. MINING SECTOR

The incentives enjoyed in the sector are:

  • Prospecting expenses
  • Claim capital allowances on mining staff housing basing on actual cost.
  • No restriction on carry over of mining losses
  • Special Rate of Tax of 15%.

Deductions allowable in terms of paragraph 4 & 5 of the 22 Schedule of the Income tax Act e.g. training investment allowance, royalties, exploration operations costs.

Rebate of duty on goods imported:

  • For specific mine development operations
  • In terms of an agreement entered into pursuant to a special mining lease.
  • For the prospecting and search for mineral deposits where one has entered into a contract with the Government
  • For the mining industry
    • Granted on eucalyptus, pine and other oils for use in the extraction of gold and other minerals by the flotation process
    • Chemical substances other than spirits, methylated spirits, fuel oils, lubricants and nitrate of lead, for use in any process for the concentration or refining of ore, or for assay or research purposes.

9. INDIVIDUAL INVESTORS

Rebate of duty on immigrant’s effects

A rebate of duty may be granted in respect of personal and household effects and other goods imported by an investor who enters Zimbabwe to take up permanent residence. This includes the spouse of the investor but excludes any person who has previously resided in Zimbabwe or has been employed in Zimbabwe, unless such person is returning to Zimbabwe after having resided outside the country for a period of not less than two years or any other shorter period as may be approved by the Minister.

  • Motor vehicles are limited to one per person and are restricted to those over 16 years.
  • The goods should have been owned by the investor at the time of his arrival and at time of importation.
  • The goods should be for personal use by the investor and not for trade or commercial purposes.
  • The rebate shall be granted once in a period of four years.

10. VALUE ADDED TAX DEFERMENT

Value added tax can be deferred on some capital equipment for the mining,

manufacturing, agricultural and aviation industries whose investment generally relies on imported capital.

The whole amount becomes due within 90 days from the date of deferment.

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