Government has agreed to offer tax incentives to foreign investors willing to invest in companies that currently require huge capital injection.In an interview with The Herald Business yesterday, Finance and Economic Development Deputy Minister Dr Samuel Undenge said a team from different ministries was in Nyanga discussing the possible incentives that can be rolled out to investors.
"It's for the country's benefit if Government comes up with incentives that can promote foreign direct investment. We need to lure investors into the country and the only way it can be done is through the creation of an investor-friendly environment.
"A special package of incentives is set to lure investors and help revive the country's ailing firms, which are at the heart of the new economic blue-print, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset)," said Dr Undenge.
He said efforts to provide tax incentives for investors are at an advanced stage with a strategic paper set to be presented before Cabinet soon.
Analysts have said the country needs to create an environment conducive for business with lower tax levels and tax breaks than those prevailing within the SADC region, giving the country an obvious advantage.
"Ireland is one such country that has attracted international corporations because of a low tax rate of about 12,5 percent. With a favourable tax regime the country is bound to attract a few corporate head offices or administrative offices for global corporations targeting Africa. For instance, Facebook is seriously looking into opening an African office. This in part is job creation (the promised two million jobs under Zim-Asset) and tax revenue," said economist Mr Nyasha Hwata.
Dr Undenge said giving incentives to investors was in line with plans to establish special economic zones.
"As you can see companies like the National Railways of Zimbabwe require huge capital injection, therefore all interested investors are certainly going to get incentives," Dr Undenge said.
Government plans to set up special economic zones in the country with Bulawayo and Manicaland set to be conferred with the status.
Setting up a SEZ would entail implementation of enabling or attractive policy in the form of tax exemptions or tax holidays for companies operating in that area in certain industries, eg manufacturing sector or real estate, tax exemptions on export profits for companies operating within the zone and tariff reduction or subsidies, such provisions would then attract investors to set up shop in an area and consequently revive the industry landscape there.
In pursuit of this goal a Cabinet update paper has been prepared by the Ministry of Finance and Economic Development to be presented before the Cabinet on the progress done so far.