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Tax Incentives to attract Investor involvement in PPP’s in Zimbabwe

Governments, the world over, often provide incentives to attract private sector involvement in public-private partnership (PPP) projects. Zimbabwe is no different. A full bouquet of tax incentives is normally available to an investor whose project has been designated as a BOT. These include:

  • Exemptions from registration tax on the acquisition of real estate for BOT projects;
  • Exemptions from, or application of a lower rate of, value added tax for infrastructure facilities or construction of those facilities supplied to the State;
  • Exemption from, or application of a lower rate of, value added tax for Management Fees;
  • Exemption from, or application of a lower rate of, value added tax for Technical Fees;
  • Exemption from, or application of a lower rate of, value added tax for payments made by the project company to non-resident suppliers;
  • Exemption from or application of a lower rate of, income tax for infrastructure facilities or construction of those facilities supplied to the State;
  • Carrying assessed loss forward for a maximum of 6 (six) years from the year of assessment in which the assessed loss was first incurred
  • Special Initial Allowance (“SIA”) with respect to capital expenditure incurred by the project company during a year of assessment;
  • Reduction of, or exemption from, various appropriation charges;
  • Reduction of, or exemption from, non-resident withholding tax;
  • Granting of a capital allowance for commercial and industrial buildings;
  • Allowing the project company to issue infrastructure bonds at a concessional tax rate on interest earned;
  • Protection against reduction of tariffs or shortening of concession period;
  • Exemption of accruals and receipts of non-resident expatriate employees, or service providers, from income tax;
  • Exemption from customs and excise duty, including surtax, for the importation of goods by the project company for the purposes of undertaking the project;
  • Exemptions from withholding tax for Royalty payments to non-residents;
  • Exemptions from withholding tax for fees payments to non-residents, including payments for software licenses;
  • Exemptions from withholding tax for payments of dividends to Non-Resident Shareholders;
  • Other fiscal incentives include exchange control approval to remit profits in full, as well as initial capital outlay.

Manokore Attorneys is able to assist investors with obtaining these, and other fiscal and non-fiscal benefits, for PPP projects.

 

Author: Ronald Mutasa