Finance and Economic Development Minister Patrick Chinamasa made the announcement while clarifying guidelines and processes for complying with the indigenization law which stipulates that foreign-owned businesses must cede majority shareholding to locals.
The minister, however, did not state when government will start levying the empowerment taxes.
“An empowerment levy at the prescribed rate shall be levied on all businesses,” he said. “The levy will be used for economic empowerment activities.”
The funds realized from the levy will be used to facilitate economic empowerment of the indigenous Zimbabweans including youths, women and people with disabilities, the minister said.
For non-compliant existing foreign owned businesses, the minister said these may continue to operate but an indigenization compliance levy will be imposed on them as a trade off for non-compliance.
“An indigenization compliance levy is to be imposed on a sliding scale rewarding businesses which are compliant whilst penalizing non-compliant businesses,” Chinamasa said.
The indigenization and empowerment law that was promulgated in 2010 stipulates that all firms in the resource based sector (mining) must adhere to the 51/49 percent shareholding, with only government entities, employee and community share ownership schemes allowed to own the 51 percent stake.
However, the 51 percent equity held by designated entities in the resource based sectors of the economy may be diluted to the extent of injection of additional capital by foreign shareholders on the condition that the designated entities shall be entitled to buy new shares in order to restore their shareholding to 51 percent within a period ranging up to 5 years, which period may be extended upon application in terms of the law, minister Chinamasa said.
Firms operating in non-resource sectors such as finance, manufacturing and energy may dispose lesser shares and achieve the 51 percent indigenization threshold through empowerment credits, the minister said.
The firms may also hold majority shareholding for a period of up to 5 years (except for the energy sector which can go up to 20 years), which period may be extended upon application in terms of the law.
Under the law, several sub-sectors such as primary production of food and cash crops, milk processing, grain milling, retail and wholesale trade and cigarette manufacturing are reserved for locals.
Chinamasa said for the reserved sectors, the indigenization compliance levy would be determined on the basis of the compliance level that excludes credits for socially and economically desirable objectives. Enditem
Source: Xinhua
