Additional fiscal, incremental incentives for businesses announced

Prof Mthuli Ncube

GOVERNMENT has announced an Incremental Export Incentive Scheme and additional fiscal enhancement measures for investors to buttress the ongoing ease of doing business reforms aimed at promoting robust export-led growth and diversification of the economy.

The interventions entail, among others, fine-tuning the policy on the export receipts retention threshold so that the benefits accrue directly to the exporters of goods and services.

This will see producers mainly in mining and manufacturing sectors as well as those businesses operating under the Special Economic Zones (SEZs) model, benefitting more.

The move follows wide consultations with exporters and key economic stakeholders on the need to motivate exporters and investors through scaling up doing business reforms to achieve desired competitiveness.

With the coming in of the African Continental Free Trade Area (AfCFTA) and guided by the National Development Strategy 1 (NDS1:2021-2025), Zimbabwe is driving at creating new and accelerated domestic industrial value chains.

The ultimate goal is to achieve both import substitution and export growth through innovative incentive growth and supportive regulatory frameworks.

Such interventions are critical as the country pursues the vision of achieving an upper middle-income economy by 2030, said Finance and Economic Development Minister, Professor Mthuli Ncube.

“Government is putting in place export and investment incentives to promote economic growth by driving export growth, diversification and competitiveness,” he said in a statement late Monday.

“Going forward, as we pursue the ideals of Vision 2030, and the objectives of the NDS-1, export growth will play a major role in the economic development of Zimbabwe.

“Higher exports will earn foreign currency remittances; create higher quality and higher productivity jobs; and lower the current account deficit hence improve the overall economic growth of the country.”

Prof Ncube said putting in place incentives to motivate exporters and investors was paramount in order to stimulate incremental exports.

In this regard he said the Government, through the Reserve Bank of Zimbabwe, has put in place the Incremental Export Incentive Scheme that seeks to boost productivity by firms currently engaged in exporting business as well as encourage entities that are not exporting so that they may venture into the exporting business.

The model also aims at generating sustainable growth in export revenue and encouraging listing and participation of more businesses on the Victoria Falls Stock Exchange (VFEX) and Victoria Falls Offshore Financial Centre.

According to Prof Ncube, the implementation framework for the incremental export incentives would upscale the export retention from the current 60 percent to 80 percent for all exporters and 100 percent for those registered under special economic zones (SEZs) and VFEX.

In order to encourage gold production and deliveries to Fidelity Printers and Refiners (FPR), Prof Ncube said gold producers who deliver quantities above their average monthly deliveries will be entitled to a retention level of 80 percent on the incremental portion or the gold delivered to FPR. Those companies listed on the VFEX will be entitled to a 100 percent retention.

“Furthermore, large-scale gold producers that qualify for the 80 percent retention threshold, shall also be entitled to directly export the incremental portion of the gold to enable them to secure funding and gold loans to enhance their gold production,” he said.

“FPR will facilitate the exportation process for the qualifying gold producers under the scheme.

“Government is also putting in place measures to rejuvenate the gold sector through putting in place a Statutory Instrument that recognises artisanal gold miners and ensures that they enhance their gold production.”

Prof Ncube also reiterated the need to assist exporters in mitigating against the risks associated with the spread of the Covid-19 pandemic through digitalisation of export documentation.

On other fiscal incentives he said tax holidays would be granted to newly established investment enterprises that fall within any priority investment with respect to corporate or turnover tax and depreciation allowance.

Also applicable are duty-free importation schemes of key manufacturing raw materials through the Duty Export Draw Back Scheme and/or the Inward Processing Scheme, which is a rebate claim for refund and applies to processing or repair of imported goods for re-export.

Under the Export Drawback Scheme refund for the import duties paid is claimed on goods exported from Zimbabwe.

Within this framework, Prof Ncube said corporate tax income from manufacturing companies with exports of 51 percent or more of its output will be taxed at the rate of 15 percent.

He also announced an export market development expenditure in which the Government provides for a deduction of an amount of any export-market development: expenditure incurred by the taxpayer during the year of assessment, together with an amount equal to 100 percent or such expenditure.

This means exporters are allowed to claim the amount of export market development expenditure incurred during the year of assessment.

Qualifying expenditures under this incentive include research activities, external advertising and soliciting for business outside Zimbabwe or participating in trade fairs and bringing in prospective buyers, among others.

Regarding SEZs, which are now being granted in terms of the Zimbabwe Investment Development Agency Act, Prof Ncube said investors in this category are also entitled to a host of comprehensive fiscal concessions provided for mainly in the Income Tax Act and the Finance Act. – Herald