Zimbabwe’s recent Budget included tax relief measures and initiatives to tackle low compliance rates.
The country plans to increase its tax revenues by introducing the concept of permanent establishment for foreign companies with business operations in Zimbabwe. The Budget included proposals for strengthened rules on intra-group interest expenses and for administration and management fees between associated enterprises.
It will expand the scope of capital gains to cover gains from all assets, tangible or intangible. Meanwhile Zimbabwe will license more producers of electronic registers for VAT accounting. Further, the standard VAT rate is proposed to apply to meat products, rice, margarine, and potatoes.
Tax relief is to provided through tax incentives for companies in Special Economic Zones. These include a 5-year corporate income tax holiday, a capital goods allowance for purchases in the first two years of operations, a flat 15 percent rate of individual income tax for expatriates, exemptions from non-residents tax on fees, royalties, and dividends. In addition, capital goods imports will be duty-free, as will raw materials that are not produced in the domestic market.
