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Business Reporter
NON-EXPORTING firms will not be entitled to benefit from tax incentives under the Special Economic Zones (SEZs) unless they meet conditions prescribed in the Income Tax Act.
Finance and Economic Development Minister Professor Mthuli Ncube said this in his 2019 Mid-Year Budget Review statement, which was presented in Parliament last Thursday.
Government has availed a number of tax incentives under the SEZs model for the benefit of companies engaged in export oriented industrial operations.
“Government notes with concern that some non-exporting companies have been designated as Special Economic Zones (SEZs) in order to benefit from the existing preferential tax regime.
“Notwithstanding operating in a Special Economic Zone, companies are, however, not automatically entitled to benefit from the existing tax incentives unless they meet the conditions prescribed in the Finance or Income Tax Act,” said Prof Ncube.
Some of the tax incentives to be enjoyed by firms operating under SEZs include; exemption for the first five years of operation and a corporate tax rate of 15 percent applicable thereafter, non-residents withholding tax on fees, and non-residents withholding tax on dividends.
Prof Ncube said from the foregoing, mining houses and other companies that produce for the domestic market cannot benefit from tax incentives under SEZs.
In addition to ensuring conformity to the constitutionally enshrined principles of fair taxation and for purposes of transparency and accountability, Prof Ncube said tax incentives shall be solely promulgated through the relevant tax legislation.
Last week the Zimbabwe Special Economic Zones Authority (Zimseza) announced that the country had received about US$900 million worth of investment proposals that were at different stages of implementation under the SEZs cluster.
SEZs are one of the key pillars embraced by Government as part of the country’s re-industrialisation drive.
In terms of section 56 of the SEZ Act, investors shall not be required to obtain a licence for the import of goods mentioned in the Act.
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