Key Takeaways: - Business environment and business structures in Zimbabwe - Tax aspects and investment incentives - Balance of Payments - Impact of COVID on Zimbabwean economy

1. CA Jugal Gala
Doing Business in Zimbabwe

2. Legends Used in the Presentation
DTAA Double Taxation Avoidance Agreement
EODB Ease Of Doing Business
FDI Foreign Direct Investment
GDP Gross Domestic Product
ICT Information and Communication Technology
IMTT Intermediated Money Transfer Tax
PCP GDP Per CaPita GDP
SDAC Southern African Development Community

3. Presentation Schema
Country Overview Setting Up Business
Tax Aspects and
Investment Incentives
Balance of Payments
Visas and Permits
COVID-19 Impact and
Reforms
Conclusion

4. Country Overview

5. Demography and Wealth
•1.50 crores (2020)
•0.19% of total world population
•Population density: 38 per Km2
•Real GDP: $ 21.441 billion (129th in world)
•PCP GDP- $1463.986 (166th in world)
•38.4% urbanized.
•Coal, Gold, Diamond, Platinum, Copper, Nickel and number metallic and
non-metallic ores
•Currency Unit: Zimbabwean dollar (ZWL, Z$): USD1= Z$ 361.90
Currency
Population
GDP
Urbanisation
Real Wealth
L

6. Business Environment
Sectoral contribution to GDP
Agriculture – 18.5%
Mining - 4%
Manunfacturing – 15.5%
Tourism - 6%
Employment
Distribution (2017)
Agriculture – 67.5%
Industry- 7.3%
Services- 25.2%
Ease of Trading Across
Borders (World Bank)
159th rank
EODB (World Bank)
Overall: 140th rank
For starting business:
167th rank
As of 2016

7. Popular Locations for Setting Up Business
- The city has been known as the Industrial hub of
Zimbabwe
- It offers a varied number of Investment opportunities
in various sectors such as Tourism, Real Estate,
Transport, ICT and Manufacturing
- As the city is in need of good infrastructure, real
estate in Bulawayo has a good opportunity to grow
and develop
- Harare, the capital of Zimbabwe is a modern,
well-planned city with good infrastructure
comparatively.
- Key business opportunities in the city include
farming, agro processing, automobile assembly
plants, transport infrastructure, health services,
hospitality services.
HARARE BULAWAYO

8. Setting Up Business

9. Regulatory Agencies
Chief Registrar of Companies
Zimbabwe Revenue Authority
National Social Security Authority and Manpower
Development Fund
The Reserve Bank of Zimbabwe
Zimbabwe Investment Authority
Registrar of Companies
Tax Collecting Authority
Regulator for Social Security
Central Bank
Regulator of FDI

10. Types of Business Structure
Types of
Business
Structure
Company
Private Limited
Liability
Company
Private
Business
Corporation
Public
Limited
Company
Branch or
Representative
Office
Sole
Proprietorship Partnership
General
Partnership
Limited
Partnership
The most common business entity for foreign investors is the Zimbabwe Private LLC.

11. Comparison between business entities
Factor of comparison Private LLC Public Ltd Company Branch/ Rep office
Time to set up 3 to 4 weeks 12 weeks 10 / 6 weeks
Legal liability Limited Limited Unlimited
Resident director requirement No No No
Minimum directors 2 2 -
Requirement of local directors 1 1 -
Minimum shareholders 1 2 -
Maximum foreign ownership 100% (49% in platinum and diamond sectors)
Minimum paid-up share capital No No No
Corporate Tax Rate 24.72% 24.72% 24.72%

12. Contd…
Factor of Comparison Private Business Corporation Private Limited Liability Company
Appropriate for Small to medium businesses Medium to large businesses
Composition Can accommodate sole traders Only accommodates 2 or more people
Legal status Has a legal persona of its own apart
from its owners
Has a legal persona of its own apart
from its owners
Liability Limited Liability Limited Liability
Perpetual Succession Yes Yes
Owners Comprised of members and has
member’s contributions
Comprised of directors and
shareholders and has share capital
Prohibition for certain investors Companies cannot hold a member’s
interest in a PBC, only individuals can
be members
Both companies and individuals can
be shareholders in a PLC
Requirement of annual returns and
audited financial statements
Not required Compulsory
Prohibition on financial assistance to
owners
No prohibition on a PBC to provide
financial assistance for the acquisition
of a member’s interest
Prohibition on a company to provide
financial assistance for the acquisition
of its own shares

13. Registration Process of Zimbabwe Private LLC
Reserve company name
with the Chief Registrar
Filing of memorandum
and AOA
Opening of bank
account
Registering with tax
authorities
Register with National
Social Security
Register with
Manpower
Development Fund
Application for License
and inspection by
officers
5 days 12 days 1 day
4 days 1 day 2 days
7 days

14. Tax Aspects and
Investment Incentives

15. Tax Profile
Corporate Tax
•CIT – 24.72% for companies (other than mining companies with special mining
leases (15.45%), but including branches)
•Capital Gains Tax- 20% if asset was acquired after 22.02.2019 and 5% if acquired
before that
•DTAs: 15
Personal Tax
•Rate of tax ranges from 20%-45% for employment income
•Threshold for taxation is USD 4200
•Other income (business) is taxed at CIT rate (24.72%)
VAT
•Standard tax rate of 14.5%
•Registration threshold: ZWL 1 million
Withholding Tax (WHT)
•15% for dividend from unlisted company and 10% for listed company (Treaty rate
may apply)
•Non-resident investors are currently exempted from WHT on interest
•15% WHT for royalties (on accrual basis)
•15% WHT on FTS (on payment basis)
Due date for filing returns
(Tax year end is December
31st )
•Corporate – April 30th
•Personal- April 30th
•VAT - Not later than 15th day of every succeeding month (For certain categories
of taxpayers returns fall due once in two months)

16. Tax Snippets
17.76%
14.80%
13.75%
13.18%
12.91%
11.44%
8.46%
2.39%
1.92%
0.24%
1.07%
0.94%
1.14%
Excise Duty
Individuals
Companies
VAT on Local sales
VAT on imports
IMTT
Customs duty
Mining royalties
WHT on contracts
Carbon tax
DFIR
Other taxes
Non-tax revenue
Composition of Net Revenue by Tax head
(2019)
Composition of Net Revenue by Tax head(2019)
17.84 17.67
15.46 15.87
20.66
0
5
10
15
20
25
2012 2015 2016 2017 2018
Tax to GDP Ratio (%)
Tax to GDP

17. Tax Incentives for Foreign Investors
•For investment designed to develop industrial parks and investment in tourism development zones
the investors will not pay tax in the first five years after which they will pay tax at the rate of 25.
•For build, own, operate, and transfer (BOOT) and build, operate, and transfer (BOT) joint ventures,
investors will not pay tax for the first five years after which they will pay tax at the rate of 15% per
annum.
•Reduced tax rates are also available for manufacturing companies which exports certain % of its
output
Tax holidays
•The government generally allows for duty exemptions in the importation of capital equipment and
raw materials used in the manufacture of goods for export
Duty Exemptions:
•Exemption from VAT for a variety of products that include agricultural produce, raw materials for
further processing, goods used in the production of agricultural, mining, industrial or manufactured
products, etc.
VAT:

18. Special Economic Zones
CorporateTax
- Zero-rated corporate
income tax for the first 5
years of operation
- CIT of 15% thereafter
Customsduty
Duty free importation on
capital equipment
Inputs which include raw
materials and imported for
use by companies set up in
the SEZs be imported duty
free. The duty exemption
will, however not apply
where such raw materials are
produced in Zimbabwe
SpecialInitial
Allowance
50% of cost from year one
and 25% in subsequent two
years
Fiscal Incentives for investments in Special Economic Zones
Employeestax
Exemption from Non-
residents tax on fees for
services that are not locally
available
WHTonfeesand
royalties
Exemption from Non-
residents tax on fees for
services that are not locally
available and on royalties
Capitalgainstax
Zero-rated CG tax
Prioritised sectors for SEZs include agriculture, manufacturing, mining, tourism, services and information communication
technology

19. Contd…
Work permits for Expatriates
•Automatic work permits for
expatriates for investments
above USD50 million
Residence Permits
•Automatic Residence Permit
for investment above
USD50 million
Water and Energy supply
•Dedicated Power and Water
supply for companies
•A package of incentives for
investors producing own
power
Non-Fiscal Incentives for investments in Special Economic Zones

20. Visas and Permits

21. Types of Visas
CategoryA
This category includes
nationals of those countries
that do not require a VISA to
travel to Zimbabwe
CategoryB
This category includes foreign
nationals from select
countries (US, UK, EU, etc.)
Such nationals can get a VISA
on arrival at the airport
CategoryC
This category includes
nationals of India, Pakistan,
etc. who will need to obtain a
VISA before travelling to
Zimbabwe
•Some of the most commonly issued visas to foreign nationals are tourist visas and short-term business visas
•In addition to those, Zimbabwe issues work permits for foreign employees.
•Work permits are available for several categories of expatriates including journalists, professionals with
specialized skills that are not common in Zimbabwe, foreign researchers, short-term employees on 6-month
contracts with local businesses.
•Application for visas or permits is to be submitted to the Department of Immigration, Zimbabwe

22. Balance of Payments

23. Foreign Investment
Zimbabwe’s Indigenization and Economic Empowerment law limits the amount of shares owned by foreigners
in the diamonds and platinum sectors to 49% with specific indigenous organizations owning the remaining 51%
The Government has signaled it intent to remove these restrictions.
Foreign investors are free to invest in the non-resource sectors without any restrictions.
The government further reserves certain sectors such as passenger busses, taxis and car hire services,
employment agencies, grain milling, bakeries, advertising, dairy processing and estate agencies for Zimbabweans
The country screens FDI through the Zimbabwe Investment Authority (ZIA) in liaison with relevant line
ministries to confirm compliance with the country’s investment regulations
Dividends are freely remittable
Zimbabwe does not promote or incentivize outward investment because of the tight foreign exchange
constraint. Any outward investment requires approval by exchange control authorities
Zimbabwe has investment treaties with 35 countries but ratified only ten of these treaties

24. BOP Snippets
6.94
0.408
0.735 1.018
2
1.669
1.121
3.063
1.306
1998 2002 2006 2010 2015 2016 2017 2018 2019
Foreign Direct Investment – Net Inflows
(as % of GDP)
2269
3882
2704
4037
3527
7363
6002 6259
2009 2012 2015 2018
International trade (US$ million)
Exports Imports
2458
1356
358
226
3040
South Africa
Singapore
China
UK
Japan
Top 5 export partners in 2018 (US$ million)
Exports
1141529
845416
524517
394113
243519
Top 5 Export Commodities (US$ Thousands)
Gold Tobacco
Nickel mattes Nickel ores and concentrates
Ferro-chromium

25. Covid-19 Impact and
Reforms

26. Covid-19 Impact
DeclineinGDP Contraction by 8.1% in
2019
WB projects a further
contraction of 5 to
10% in 2020
Inflation
Food prices increased
by 725%, resulting in a
severe loss of
purchasing power for
the poor
Poverty
The number of
extreme poor is
projected to increase
from 6.6 million in
2019 to 7.6 million in
2020
Trade
Exports of goods,
mainly primary
commodities, which
accounted for an
estimated 22% of GDP
in 2018 are expected
to be adversely
affected by direct and
indirect linkages with
the global economy,
mainly China and
European Union (EU)
countries

27. Covid-19 Reforms
•Stimulus packages to provide liquidity to several sectors, expand
social safety nets and food grants, set up a health sector support fund
was announced
•COVID-19 cash transfers are in the process of being provided to
eligible beneficiaries
Fiscal measures:
•Statutory Reserve Ratio was lowered from 5 to 2.5%
•Policy rate was lowered from 35% to 10% but was reverted back to
35% in July 2020.
•Private sector lending facility was increased
•In March 2020, the RBZ moved from a fixed exchange rate regime to
a managed floating exchange rate system
Monetary measures:
•Corporate tax credits of up to 50% for COVID-19 donationsOther measures:

28. Conclusion
Zimbabwe’s strategic location in the SDAC region provides a regional gateway (North-South Corridor) and
access to major regional markets
The country is a resource endowment with over 55 exploitable important minerals/materials resources,
however, FDI in mining sector is subject to certain restrictions.
Another aspect to be considered is the 91.75% youth literacy rate (most educated youth in Africa) which
implies a strong human capital base
Contraction in GDP growth over the past years, high inflation, high poverty rates and high income inequality
have been concerns in the Zimbabwean economy
However, the Government of Zimbabwe commits to implement effective, favourable and transparent
investment climate
The Government is open to investments that create value addition and job creation.
The priority sectors for investment include mining, manufacturing, agriculture, tourism, ICT and
infrastructure development

29. Thank You!
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