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Build Own Operate and Transfer (BOOT) and BOT Arrangements Contractors may enter into contracts with the State or a statutory corporation under which the contractor undertakes to construct infrastructure for the State or statutory corporation and assume the right to operate or control the infrastructure for a specified period after which the contractor will transfer ownership or control to the State or statutory corporation. The contractor will enjoy a tax holiday for the first five years and be taxed at 15 percent for the second five years.
Special Initial Allowance (SIA)
l This is a capital allowance which ranks as a deduction and is allowed on expenditure incurred on construction of new industrial buildings, farm improvements, railway lines, staff housing and tobacco barns, including additions or alterations to existing items as already mentioned
l SIA is also allowed on articles, implements, machinery and utensils purchased for purposes of trade.
Double Taxation Agreements (DTAs)
Zimbabwe has signed several Double Taxation Agreements (DTAs) which are meant to:
l Avoid or mitigate double taxation of the same income in the two countries to the agreement, that is, where a business entity operates in the two territories.
l Restrict some withholding taxes to the amounts specified.
l In some cases, they prescribe specific or reduced rates of withholding taxes on dividends, interest, royalties, technical fees and others. As an example, almost all the DTAs signed limit the rate of tax on technical fees to 10 percent or less.
Value Added Tax
The provision of services to a person who is not a resident of Zimbabwe and who is required to pay for such services in foreign currency is VAT zero-rated if supplied by:
l The operator of a tourist facility designated as such in terms of the first schedule to Statutory Instrument 106 of 1996 Tourism (Designated Tourist Facilities)(Declaration and Registration) Regulations, 1996.
l The owner of any place (other than a place wherein the owner ordinarily resides) where persons are provided, on payment of a charge, with residential accommodation, whether with or without meals, commonly known as a “boarding house” or “backpackers” lodge.
l The operator of a hunting safari.
l Tourist facility operators conducting business in approved tourism development zones or the operator of a hunting safari are required to charge VAT at 0 percent for services offered to persons who are not residents of Zimbabwe.
l Non-residents are required, under the Exchange Control Act [Chapter 22:05] to pay for such services in foreign currency. With the advent of dollarisation, both residents and non-residents are now transacting in multi-currencies.
Disclaimer: This article was compiled by the Zimbabwe Revenue Authority for information purposes only. Zimra shall not accept responsibility for loss or damage arising from use of material in this article and no liability will attach to the Zimbabwe Revenue Authority.
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leeroy
Online Reporter