ZIMBABWE

(e) INCENTIVES

General Incentives

Dividend remittance threshold for companies established prior to 1979 has been increased from 25% to 50% of net after tax profits, through the interbank market; 

Dividend remittance for companies set up after 1 May 1993, is now 100% and payment is effected through the interbank market; - Foreign investors may hold up to 100% equity in companies operating in preferred sectors of the economy, i.e. those sectors other than specified in 51108 of 1994; 

Foreign investors may hold up to 35% equity in companies which are in reserved areas as specified in 51108 of 1994; - In construction and specialized services, foreign investors may hold up to 70% equity; 

Exporters are entitled to retain 100% of their export proceeds with authorized dealers in corporate Foreign Currency Accounts (FCAs); 

Investment inflows and capital transfers are eligible for 100% deposits into FCAs; 

Exemptions from import tax (sales tax), surtax and customs duty on equipment an machinery imported for productive purposes; 

Surtax has been reduced from 15 to 10%; - No restriction on local borrowing; 

Flexibility in recruitment and engagement of expatriate personnel with maximum contract periods of up to five years; 

Investors investing significant sums in ZIC approved projects are eligible to acquire permanent residency, depending on amounts involved; and 

25% Special Initial Allowance on cost of industrial and commercial buildings and machinery is granted as a rebate for the first four years. 

Tariff Structure In Zimbabwe

In order to encourage private business Zimbabwe's tariff regime is deliberately designed to promote investment and production. It allows the importation of raw materials to be used for the manufacture of goods for export and some capital equipment on a duty free basis.

In addition, duties for intermediate goods are relatively low with finished goods attracting the highest duties (a few selected products enjoy high tariff protection).

Duty Drawback and inward Processing Schemes

Most exporters of manufactured goods are afforded the opportunity to access their imported inputs at price levels close to the world prices through the duty drawback and inward processing schemes.

The duty drawback scheme enables exporters to claim refunds of duties initially paid on imported inputs used in the manufacture of products for export, upon proof of such export.

Inward processing rebate is a duty suspension scheme that allows registered beneficiaries, normally the larger exporters, to import inputs in bond without paying duty but required to maintain accurate inventory records. Duty is only payable in the event of such inputs being used to manufacture for the Zimbabwean market.

It is recommended, however, that as the refund of duty is not automatic and to take full advantage of the rebate scheme investors should, in the first instance, consult with the Department of Customs for registration.

Investing In Growth Points

From time to time the Minister of Finance may declare specific locations as Growth Point areas. The Minister may limit the declaration so that it applies in relation to a particular business or operation or for particular purposes.

Incentives available to investors developing new business in Growth Point areas are a concessionary rate of corporate tax at 10% for the first five years of operation, a special initial allowance for commercial building and an investment allowance. The investment allowance is a once-off allowance and can be combined with a special initial allowance. The investor is also entitled to a refund of sales tax paid on goods used in the construction of any permanent building or improvement located in a Growth Point.