Online Reporter
The Herald, 23 April 1988
A DOUBLE taxation agreement signed in Harare yesterday should encourage more companies from the Federal Republic of Germany to operate in Zimbabwe.
The agreement which, waives double taxation with respect to taxes on income, capital and capital gains, is aimed at a more equitable taxation since both governments imposed tax.
The acting Minister of Finance, Economic Planning and Development, Cde Enos Nkala, signed for Zimbabwe and the outgoing Federal Republic of Germany Ambassador to Zimbabwe, Mr Franz von Mentzingen, signed for his country. The Minister of Foreign Affairs, Cde Nathan Shamuyarira, also attended the signing ceremony.
Cde Nkala said the agreement would lay down the basis for taxation of companies and individuals where there was income accruing from one country to the residents of another country.
He said the agreement would reduce tax on dividends and would attract incentives for the establishment of industries, thereby boosting economic growth and the creation of jobs.
Mr Franz von Mentzingen said the agreement would remove trade restrictions between the two countries and improve their economic relationship.
He hoped German companies which intended to begin joint ventures with companies in Zimbabwe would consider the agreement beneficial.
Lessons for today:
The tax deal was a good initiative, it removed a real barrier to foreign investment. Before the agreement, companies operating between Zimbabwe and West Germany faced double taxation on the same income. That discouraged firms from investing or expanding.
In the late 1980s, Zimbabwe was still shaping its post-independence economic identity. Despite socialist influences, the government recognised the need for foreign capital, joint ventures and international partnerships.
The tax deal aimed at long-term economic benefits. The Finance Minister highlighted that the deal would reduce tax on dividends, encourage establishment of industries, stimulate economic growth and create jobs. This shows the agreement was not just about revenue, but about wider economic development.
The ambassador specifically mentioned joint ventures between German and Zimbabwean companies. This suggests skills transfer, technology sharing and local participation in foreign investment. This was important for preventing purely extractive investment.
The agreement alone could not guarantee investment, but it created enabling conditions, which is exactly what good policy should do. It demonstrated that Zimbabwe understood global economic realities, was willing to reform its tax system and sought growth through cooperation rather than isolation. The article reflects a period when the country was actively trying to position itself as an attractive, rules-based economy.
