|Government set to amend ZIA Act|
|Saturday, 28 July 2012 19:44|
Government is set to amend the Zimbabwe Investment Authority Act in a bid to lure more foreign investors as foreign direct investment continues to drop, it has been learnt.
The Permanent Secretary in the Ministry of Economic Planning and Investment Promotion, Dr Desire Sibanda, said the amendment will include zero percent income tax for the first five years, exemption from capital gains tax and from non-resident taxes, including duty-free importation and refunds on sales tax on goods and services.
“The Act will allow our ministry to give incentives to licensed investors whether foreign or domestic, such as primary producers, exporters and investors. In some cases this is meant to promote value addition.
He said the creation of SEZs will attract more foreign investors, help to formalise the informal sector and encourage all investors to contribute in moving the country from exporting raw materials to exporting manufactured products. If exports increase, it means more money will be going into the banking sector and thus, the problem of high interest on borrowing rates will be solved, he said.
According to the Medium Term Plan, the biggest challenge in attracting capital to the productive sectors of the economy is the high interest rates levied by banks.
The MTP states that foreign investors and visitors are allowed to bring any amount of foreign exchange into the country and their equity may also come in the form of machinery and equipment.
Only raw materials, technical fees and other services may not be considered as part of the equity. Investors are also entitled to up to 100 percent of dividends from net tax profit through their local authorised dealers, while also being given the leeway to remit 100 percent of the original capital investment in the event of disinvestment.
Investment into the country has been affected by a lack of lines of credit, and efforts are being made by Government to attract liquidity through the signing of
Bilateral Investment Promotion and Protection Agreements (Bippas).
“Bippas are changing the negative perceptions of foreign companies and thus creating an opportunity to link Zimbabwe with fast-growing countries such as China,” said Dr Sibanda.
Government also intends to re-establish export processing zones to attract foreign direct investment and domestic investment in the form of joint ventures and partnership between locals and foreigners.
While in other African countries Diaspora investments account for 25 percent of GDP, Zimbabwe has only 6 percent and yet it has one of the largest Diaspora populations.