Govt urged to be clear on tax incentives


CAPTAINS of industry in Bulawayo have called on the government to clearly spell out the tax incentives introduced when the city is to be declared a special economic zone.


Economic zones are expected to spearhead the revival of the defunct industry in the city.

Speaking to captains of industry at a post-budget seminar held in Bulawayo on Friday, Ernst and Young business and tax advisory manager Peter Mugodi said the government should clearly spell out the tax incentives package to be effected on proposed special economic zones.

“The industry should now be lobbying the government on what tax incentives the much hyped idea of declaring the city a special economic zone to the city has,” he said.

“The government should be clear on how the special economic zone would be implemented.”

Mugodi said for the special economic zone to be effective the government should, among other tax obligations, consider exempting the distressed Bulawayo firms from income tax and custom duty which he said would reduce the tax burden and then cost of production for the companies.

Captains of industry recently made calls to the government consider coming up with a one-stop shop office combining all licensing institutions in Bulawayo if it was to benefit from being declared as specialised economic zone. They said the licensing process in setting up a business in the country was bureaucratic and time-consuming adding that it should be modified to attract the much-needed investment especially in Bulawayo.

Critics say declaring Bulawayo a special economic zone is long overdue. The government last year announced that it was targeting declaring Bulawayo a special economic zone during the first quarter of 2014 after the finalisation of amendments to the Investment Act.

The Act currently has no provision to allow the declaration of economic zones. Special economic zones are designated areas in a country that possess special economic status – enjoying tax incentives and exemption from duty on importation of raw materials among other things – to create an investor-friendly environment.

They have been implemented successfully in China, Jamaica and Zambia with South Africa recently passing a Bill to set up economic zones. The same model is also expected to arrest Bulawayo’s economic down turn.

The city is facing an acute water shortage and erratic power supplies which have seen close to 100 companies closing. Declaring the city an economic zone is expected to attract investment that Bulawayo desperately needs.

The declaration has for long been stalled by the slow progress in the amendment of the Investment Act.

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