THE Zimbabwe Stock Exchange (ZSE) has tabled plans to push for lucrative incentives in a bid to encourage companies to list on the bourse.
The informal sector is booming while many companies shun listing on the stock exchange, fearing tax burdens and operational complications.
But speaking to The NewsHawks this week, ZSE chief executive officer Justin Bgoni (pictured) said efforts to lobby the government to offer lucrative incentives to encourage listings were at an advanced stage.
“We recommend that listed companies get extra tax credits for listing, for example, initial listing expenses could have special tax exemption status. On the Victoria Falls Stock Exchange, the exchange lobbied for increased export retention of up to 100% for listed exporters,” Bgoni said.
“Lower corporate tax implies greater retained earnings for the listed companies and this motivates them to want to be listed. Increased export retention implies more foreign currency resources for the listed entities and this also motivates companies to list.”
He said the ZSE had since recommended lower corporate tax for listed companies, the recognition of listing expenses as being deductible for tax purposes, and tax credits for investment losses incurred in investing in exploration companies’ securities.
“The ZSE has also been lobbying for the removal of the capital gains withholding tax which is currently 1% on the sell side. The inclusion of the capital gains tax has seen the ZSE being one of the most expensive exchanges in the Southern African Development Community region, which unfortunately makes the market less attractive,” Bgoni said.
He emphasised that the ZSE will continue lobbying for the exemption of the capital gains withholding tax, as this will aid in reducing the overall transaction fees, hence increase the participation of both retail and foreign investors.
However, market watchers believe that apart from these efforts, the authorities also need to address the country’s risk factors which have dissuaded foreign investors from venturing into Zimbabwe. — STAFF WRITER
