Govt unveils tax incentives for industry
THE government is offering tax incentives to businesses across four sectors of the economy to promote industrialisation.
Speaking at the International Business Conference held at the Zimbabwe International Trade Fair last week, Finance minister Mthuli Ncube said the country is focusing on accelerating value addition through industrialising the economy.
“Investment in value addition will transform Zimbabwe’s economic structure from one highly dependent on the export of minerals and agricultural raw materials to an economy trading high-value processed goods,” he said.
According to Mthuli Ncube, 80% of goods on the shelves currently are domestically produced.
He said the government was fast-tracking value addition and beneficiation of agriculture and the development of agro-business value chains, augmenting investment in mining towards exploration, beneficiation and value addition of minerals, including levelling the field to accommodate small-scale miners in order to create more jobs and increasing foreign currency earnings for the country.
To achieve this, the government suspended duty on materials used in preparing and packaging fresh produce for export in the agricultural sector under [Section 132 of the Customs & Excise (General) Regulations].
“Most farm inputs such as animal feed, animal remedy, fertiliser, plants, seeds and pesticides and equipment or machinery used for agricultural purposes are zero rated for VAT purposes,” he said.
The mining sector was offered indefinite carry-over of losses, meaning the carry-over of tax losses could be carried forward without period restrictions and the holders of Special Mining Leases (SML) would have their corporate income taxed at a special rate of 15%. The sector was also exempted from taxes such as the non-resident shareholder’s tax; non-resident’s tax on fees; non-resident’s tax on remittances and non-resident’s tax on royalties.
In the tourism sector under Statutory Instrument 279 of 2018, the government suspended duty on imported capital equipment by tourism operators, imported motor vehicles by approved safari operators and buses imported by approved tour operators.
The manufacturing sector was offered electrical manufacturers’ rebate, pharmaceutical manufacturers’ rebate, clothing manufacturers’ rebate, textile manufacturers’ rebate and furniture manufacturers’ rebate.
This made the plant, equipment or machinery that is used exclusively for manufacturing or industrial purposes in, on or in connection with a factory exempt from customs duty payment as the minister responsible for Industry may approve.
The minister added that the government offered more incentives that applied to all sectors, including VAT rate reduction at 15% below regional average rate of 16%.
“Tax holiday for the first five years of operation, Corporate Income Tax of 15% during the second five years, thereafter, a standard corporate income tax rate of 24% applies, duty drawback of certain duties (refund of duties previously paid),” said the Finance minister.
Through the establishment of the National Development strategy (NDS 1), the government set to industrialise the economy to increase exports, domestic products and transform the economy by moving it up the value chain by 2030.