Vusumuzi Dube
Vuyisile Mlilo , Business Reporter
SECURITIES and Exchange Commission of Zimbabwe (SecZim) chief executive officer (CEO) Dr Anymore Taruvinga has called for the amendment of legislation to enable Real Estate Investment Trusts (REITs) to list with Zimbabwe Stock Exchange.
Dr Taruvinga singled out the Securities and Exchange Act, however, noting that General Notice 469 was a significant step in recognising REITs as securities. In a notice, Dr Taruvinga highlighted the importance of tax exemptions in promoting the growth of REITs.
“The Finance Act of 2020 plays a crucial role in providing tax exemptions for REITs, making them more attractive to investors. One of the key ingredients for REITs is the tax pass-through, which allows investors to benefit from the tax advantages associated with real estate investment.
“Private REITs are also recognised under the Statutory Instrument 240 of 2019, allowing them to be registered. However, the Finance Act lays out specific conditions for tax exemptions, where private entities are not eligible to bring in assets developed prior to 2020. This condition is intended to promote the inclusion of newly developed assets in the REIT market,” he said.
He also noted that the Finance Act stipulates that tax exemption is only available to companies listed on an exchange recognised by the Securities and Exchange Commission. This requirement, he said, ensures that REITs meet certain regulatory standards and provide investors with a level of confidence in their investment.
“There are however, still some areas where improvements could be made. The absence of tax exemptions for Value Added Tax (VAT) and capital gains, which are standard in other jurisdictions is also a cause for concern. Addressing these gaps would further enhance the attractiveness of REITs to investors and encourage more participation in the market,” he said.
Dr Taruvinga highlighted the need for a quicker listing process on the Zimbabwe Stock Exchange (ZSE) and the Victoria Falls Stock Exchange (VFEX) after a REIT has been registered.
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