Doing Business In Zimbabwe Guidelines, Regulations, Incentives BY WISDOM MUTERO
Out line of The Presentation • Zimbabwe Country Profile • The Role of Zimbabwe Investment Authority • Investment Approval Process • Taxation • Investment Incentives • Why Invest in Zimbabwe • Key Projects for Investment
Zimbabwe profile • Population: +/- 12 million • Annual population Growth: …………1.1% • Literacy Level…….90% • Shares its borders with, Botswana, Zambia, Mozambique, Namibia, SA • Friendly and Sporting Nation whose main spoken • Languages are English, Shona and Ndebele
Zimbabwe’s Foreign Trade • Major Export Products - Agricultural products • ( Tobacco, Sugar, Beef, Cotton) • Minerals • (Platinum, Nickel, Gold, Black granite & diamonds) • Manufactured products • (Cotton lint, Ferro-alloys, Iron & Steel, Textiles) • Main Export Destinations -Germany, South Africa, Japan , China, USA • Major Import Products - Fuels, Chemicals, Machinery, Rubber and Electrical products • Main Import Sources • - Germany, South Africa, China, USA
Key Priority Areas of Investment • Agriculture Mining • Tourism Manufacturing
The Role of Zimbabwe Investment Authority • ZIA is a statutory body established by the ZIA Act No. 4 of 2006 with the mandate to promote, facilitate and coordinate investment in Zimbabwe. • ZIA is the first port of call for investors in Zimbabwe. • It is a one-stop-shop for all investment information and facilitation • Investors are facilitated to obtain all the necessary permits, licences and all authorisations required to establish their businesses in the country.
ZIA’S ONE STOP SHOP • ZIA is being transformed in to a OSS. • All investment licences to be processed at ZIA • investment regulatory bodies to be housed at ZIA • Targeted Institutions –Zimra, Min of Mines, Reg of Comp, Immigration Authorities, Local Authorities and other Gvt depts. • Seeks to reduce time taken to set up business .
Project Approval Process • ZIA Investment License • All new foreign investment into Zimbabwe requires an investment license issued by ZIA in terms of the ZIA Act. • Applicants submit project proposal in form ZIA 1 which can be obtained from ZIA offices or downloaded from ZIA website (www.zia.co.zw). • Company registration documents are to be submitted together with the application. • Project approval time frame: within two weeks.
Immigration Requirements • Visas: Visitors from some countries are required to obtain visas in advance of travel from the Zimbabwe Embassies in the respective countries. Others can obtain their visas at the port of entry whilst some countries do not require visas to travel to Zimbabwe. • Details of countries’ categories can be obtained from Immigration Department, the respective embassies or from ZIA. • Residence Permits: Licensed investors qualify to obtain residence permits upon fulfilling the requirements which include a minimum investment threshold of US$100 000 per investor
Local Authority Licenses • Local Authorities issues business licenses. • Land can be purchased from the Local Authority or private land owners. • For construction of factory premises Companies need licensing by the respective local authorities. • Before constructing a new building the plan has to be approved by the local authority • The plan is also sent to other utility providers for consideration
Utilities-Service Providers • Telecommunications: Telone, Powertel and 3 mobile operators offer telecommunication services. • Electricity Connection: ZESA Holdings. • Water Connections: Local Authorities
Registration under the different tax heads with ZIMRA • Companies operating in Zimbabwe are required to pay their taxes to government through Zimbabwe Revenue Authority (ZIMRA) • Companies need to acquire a business partner (BP) number and register for Pay as You Earn (PAYE) by completing REV1 Form • Companies meeting an annual threshold of US$60 000 turnover qualify to register for VAT by completing VAT 1 Form. • Registration is done once the Company commences operations and for foreign owned companies this will be post ZIA approval
Mining entities • Mining claims obtained from the Ministry of Mines and Mining Development. • Exploration entities are required to obtain an Exclusive Prospecting Order (EPO) from the same Ministry. • All mining entities are required to carry out an Environmental Impact Assessment of their project submitted to the Environmental Management Agency (EMA) • Export of minerals with the exception of gold and platinum is done through the Minerals Marketing Corporation of Zimbabwe (MMCZ)
Tourism Entities • Operators in the tourism sector are required to register with the Zimbabwe Tourism Authority (ZTA) after licensing by ZIA to be registered as an operator in the sector. • Companies developing infrastructure such as hotels, lodges, guest houses and lodges are required to get development permits from respective Local Authorities. • Operators offering transport services like car hire, boats, tour operators are required to register with the Ministry of Transport and Communication. • Boat operators should also acquire seaworthiness certificates from the Ministry of Transport.
Investment Incentives TAXATION • Corporate Tax Rate 25% • Value Added Tax 15% • Shareholders’ Tax on Dividends • Listed Shares 1% • Unlisted Shares 5%
Investment Incentives • Mining Companies- Taxation • Royalties shall be calculated as percentage of the gross fair market value: Precious stones 10% Base Metals 2% Precious Metals 4% Industrial Minerals 2% Coal Bed Methane Gas 2% Coal 1%
Investment Incentives • Other mining investment concessions • A rebate on duty is granted on all capital goods imported for mining development operations and during the exploration phase of a mining project. • Operation of foreign currency accounts is permitted. Offshore Foreign Currency Accounts shall be granted to major mining projects upon application to the Reserve Bank of Zimbabwe. • On disinvestment, 100% repatriation of invested capital is allowed. • Investments of more than US$100 Million qualify for Special Mining Lease, which allows investors to negotiate favourable concessions • A special rate of VAT arises on the export of un beneficiated chrome of 20%.
Investment Incentives • PPP- under the Public Private Partnerships (PPPs) framework. Investors will negotiate with the government for incentives.
Investment incentives Industrial Park developers • A tax rate of 0% will apply for the first five years but only to • those industrial park developers that commenced operations prior to 1 January 2010.
Macro-economic reforms undertaken Exchange control • Government has deregulated exchange control and has delegated export administration and payment authority to banks. • Off shore payments now possible without prior exchange control approval. • All income related transactions no longer require prior exchange control approval. Banking and Finance • Limitless cash withdrawals. • Residents and corporate can now deposit up to US$ 1 million without declaration of the source of the money. • Holders of FCAs can now safely hold foreign exchange in their accounts indefinitely.
Why invest in Zimbabwe?Key success Factors AbundantNatural Resources. • Zimbabwe has a wealth of exploitable resources including:-. • Agricultural output, plantations, natural forests, offer a wide range of resources to be exploited . • A wide range of minerals under exploitation with discoveries of new ones all the time also provides opportunities for beneficiation and value addition of these minerals. • Diverse wildlife in many parks and sanctuaries provide opportunities for development of the tourism sector
Why invest in Zimbabwe?Key success Factors Access to Markets • Zimbabwe is strategically located in the centre of the Southern African region. • Giving Access to Regional and World markets , Zimbabwe is a member of : • Regional organisations -Southern African Development Community (SADC) [Over 190 million people] • Common Market for East and Southern Africa (COMESA) [A market of over 400 million people] • International organisations ACP-EU Convention of Cotonou World Trade Organisation (WTO)
Investor Protection and Security • Zimbabwe is a signatory to the following treaties: • Multilateral Investment Guarantee Agency (MIGA) • Overseas Private Investment Corporation (OPIC) • International Convention on Settlement of Investment Disputes (ICSID) • New York Convention on the enforcement of Foreign Arbitral Awards • United Nations Convention on International Trade Law (UNCITRAL). • Several BIPPAs
Investor’s Prospectus: Key Project Profiles • Zimbabwe Power Company –Power Generation. • Hwange Colliery –Coal mining recapitalisation. • N R Z –Refurbishment of Equipment. • Air Zimbabwe –Aircraft Fleet Renewal. • Telone –Telecoms network upgrade . • Grain Marketing Board –Contract farming. • Local Authorities – water management and sewer reticulation systems • SEDCO –Short term loans to SMEs. • IDC –Diamond exploration, mining and processing.
Conclusion • Zimbabwe has embarked on an economic turnaround drive aimed at resuscitating the fortunes of the economy through Investment promotion. • This is the time to invest taking advantage of the vast investment opportunities available • Your participation will be greatly rewarded