Over a number of years, the Government of Zimbabwe (GOZ) has introduced a number of tax incentives designed to give you the greatest return from your investment. These, in turn, are mainly focused on four primary objectives, namely:
- Increasing the country’s production capacity;
- Increasing the country’s export earnings;
- Employment creation; and
- Infrastructural Development;
To this end, the following are some of the incentives available to multiple sectors in the economy.
Tax Incentives for Developments
Developments in Marginalised Areas
One of the GOZ’s main thrusts is the development of marginalised areas, in particular rural communities. As such, there are two tax incentives targeted at a infrastructural development and employment creation at specified growth points around the country. These are as follows:
Capital Allowance
Developers are allowed to claim a capital allowance of 25% of the cost of construction of a commercial or industrial building in growth point areas in the year when the building enters service and 25% during the three years that follow the year of construction.
Investment Allowance
Developers are allowed to claim an investment allowance at 15% on the cost of specified assets.
Developments in Special Economic Zones (SEZs)
The GOZ is in the process of establishing multisectoral SEZs in different parts of the country with the following objectives in mind:
- To restore the economy’s capacity to produce goods and services competitively.
- To create economies of scale good enough for the locator of the proposed SEZs to be internationally competitive;
- To ensure inclusive growth emanating from the spread of growth nodes and diversified provincial offerings;
- To maximize the economic benefits of a given geographical location and its stakeholders.
- To attract more investment from the International world.
Tax incentives are part of the proposed lure as businesses established in these SEZs will be exempt from duty on goods and equipment consumed in establishing the business, will be tax exempt for the first five years, and will have a 15% tax rate thereafter.
Developments of Industrial Parks
In a bid to promote production and introduce more advanced productive technologies, developers of Industrial Parks will not be taxed for the first five years, following which they will be taxed at the normal rate.
Build, Operate, Transfer Developments
Developers of large infrastructural development projects who enter into Build, Operate, Transfer (BOT) contracts with the government are not taxed for the first five years, are taxed at a rate of 15% for the second 5 years, and the normal tax rate thereafter.
Tax Incentives for Exporters
General
In addition to costs incurred locally in relation to the movement of the products to the export country, exporters are also allowed to claim all of the costs incurred in the export country as well.
Exporting Manufacturers
Businesses manufacturing for the export market are taxed at a reduced rate of 20%.
Other
Tourist Facility in Tourism Development Zone (TDZ)
Investing looking to develop tourism facilities in any of the designated TDZs (i.e. Harare, Eastern Highlands, Chimanimani, Gonarezhou, Limpopo, Great Zimbabwe, Midlands, Bulawayo, Victoria Falls, Kariba, and Mavhuradonha) are not taxed in the first five years, reverting thereafter to the normal rate.
Mining Companies
Mining companies are taxed at a reduced rate of 15%.