HARARE: Empowerment minister Patrick Zhuwao says he hopes to collect $93 million from his proposed indigenisation tax which he expects to be imposed by year end.
The tax also appears designed to force foreign companies to comply with the country’s indigenisation laws under which they must transfer 51 percent of their businesses to black Zimbabweans. Addressing journalists in Harare Tuesday afternoon, Zhuwao said the levy was aimed at empowering local communities and youths.
Companies will have to pay 10 percent from their gross income towards the tax annually or indigenise their firms to pay less. “The levy will be distributed through 61 registered community share ownership trusts established country wide.
“From our calculations, each community trust will at least receive $1.5 Million,” he said. The proposals has however, attracted criticism from business leaders who say the government is overburdening struggling companies. But Zhuwao said the levy would act as a motivator for companies to indigenise as they will receive a discount in accordance with the level of their complaince.
“If a company is indigenised, let’s say 100 percent, that company will a discount of the same rate,” he said. “If the company is indigenised by 50 percent, the discount is the same. For me, it would be prudent to comply with the law than to pay the levy.” The minister said he hoped the levy would come into effect in 2016 with the rate increasing from 10 percent to 12.5 percent by 2017.
“We are saying, for companies that are failing or unwilling to indigenise, they will pay and, for me, I will be very glad to receive the levy because I know that it is money for the empowerment project,” he said.
He defended the black empowerment law which has been blamed for the lack of meaningful foreign direct investment into the country. Zhuwao said the legislation helps empower locals and also grow the country’s economy.
Asked if there was any propspect of a review to the law, he said; “I am implementing the law and I have not received any instructions from my boss of any idea of reviewing the act.”
