Special Economic Zones: a new paradigm for investing in Zimbabwe
The Zimbabwe Special Economic Zones Authority, (SEZ Authority) has recently been constituted. It is a regulatory body tasked with the administration of economic zones – and is part of the new Zimbabwean government’s “Zimbabwe is open for business” policy aimed at attracting both foreign and local investment. Obtaining SEZ licensing is highly beneficial for any entity engaged in large scale projects, as SEZ licensing comes with a raft of incentives.
How to obtain SEZ Licensing
The granting of a SEZ license is regulated under the Special Economic Zones Act [14:34]. In terms of the Act and Regulations, upon payment of the prescribed fees the SEZ Authority may grant licenses to projects or entities as either an investor, operator or a developer. In determining whether, to grant or deny such an application, the Authority will consider the following:
- the nature, financial and technical feasibility or sustainability of the proposed project;
- the intended size and perimeter of the proposed SEZ;
- if the SEZ is a multiple sector SEZ or single sector SEZ;
- compliance with applicable economic and socio-environmental requirements under any laws of Zimbabwe;
- the ability of the State or of the licensed investor, to adequately compensate any person resident within the proposed SEZ who may need to be expropriated or relocated or both as result of the SEZ; and
- any other considerations as may be prescribed by the Authority.
The SEZ Authority will make its decision on whether the required license has been granted within five days.
The incentives which come with being licensed as either an SEZ investor, operator or developer include the following:
- zero-rated Corporate Income Tax for the first 5 years of operation with a corporate tax rate of 15% thereafter;
- duty free importation on capital equipment;
- exemption from non-residents tax on fees for services that are not locally available;
- exemption from non-residents tax on royalties;
- Duty free importation of raw materials that are not locally available; and
- Zero-rated capital gains tax.
SEZ licensing can be a critical component in ensuring the early phase viability of large scale projects. Manokore Attorneys has recently, advised a client in the mining and steel manufacturing sectors in successfully obtaining SEZ licensing.
It is our considered view that with successful adaptation and implementation of the SEZ model such as in the more developed economies like China and Kenya, this will continue the positive investor sentiment and cement Zimbabwe as an attractive investment destination.