The Sunday Mail
INDUSTRIALISTS say export incentives outlined in the 2015 National Budget will help rehabilitate the local manufacturing sector.
Exports are key to reducing the country’s trade deficit that continues to widen on soaring imports.
Finance and Economic Development Minister Patrick Chinamasa on November 27 introduced an incremental corporate tax structure for exporting companies as a deliberate move to help lift exports.
Under the new structure, companies exporting between 30 percent and 40 percent of their goods will be charged 20 percent corporate tax, while those shipping between 41 percent and 50 percent will be charged 17,5 percent. Exports of more than 51 percent will attract a corporate tax of 15 percent.
The Confederation of Zimbabwe Industries said the new incentives were likely to boost trade. Exports remain depressed as industrial capacity continues to plummet.
“The incentives put in place in particular the removal of withholding tax on agents that find markets for exporters, reduction in corporate tax for exporters and the recapitalisation of the Export Credit Guarantee Corporation to resume playing its strategic role of promoting growth of exports will go a long way in boosting trade with export markets,” noted CZI last week.
However, the industry representative body opines that the Industry and Commerce Ministry should make periodic checks on both implementation of policies and effectiveness of the system.
Industrialists argue that previous incentives such as duty drawback, inward processing rebate and reduced tax for companies exporting more than 50 percent of manufactured output were largely unsuccessful because of poor follow-up mechanisms.
Early this year, a local manufacturing export survey report by ZimTrade revealed that only 40 percent of manufacturers were exporting their products. Favoured export destinations continue to be South Africa, China, European Union and some Comesa countries.
The report further revealed that 71,4 percent of companies that were active exporters five to ten years ago had since stopped exporting owing to worsening production costs that made export trade unviable.
Last week, CZI also called for the timeous implementation of special economic zones, clarification of the Indigenisation and Economic Act and speedy review of the Labour Act. Labour related issues are regarded as one of the major impediments in attracting FDI, which is crucial for industrial development.
The proposed tax exemption on foreign agents’ fees will also likely help exporters.
“Exporting companies use foreign agents to pre-sell products in external markets. The agents charge fees which are subject to 15 percent withholding tax. In order to assist exporters to secure markets, I propose to exempt foreign agents’ fees from withholding tax. The agents’ fee should however not exceed 5 percent value of exports based on free on board prices,” said Minister Chinamasa in budget presentation.
