Foreign firms in reserved sectors to pay levy

Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao (right) stresses a point during  a Line Ministries Seminar held in Harare on Wednesday while National Indigenisation and Economic Empowerment Board chief executive Mr Wilson Gwatiringa (left) follows proceedings. — (Picture by Shelton Muchena)

Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao (right) stresses a point during a Line Ministries Seminar held in Harare on Wednesday while National Indigenisation and Economic Empowerment Board chief executive Mr Wilson Gwatiringa (left) follows proceedings. — (Picture by Shelton Muchena)

Tawanda Musarurwa and Tinashe Makichi
Government has ordered all licencing authorities to stop issuing licences to foreign-owned companies that wish to invest in the reserved sectors of Zimbabwe while those who are already in the sectors will pay the proposed empowerment levy if they have not yet complied with the law.

Non-complaint firms could be levied up to 10 percent of their gross turnover, but the levy can be moderated up to 100 percent on the basis of compliance, Youth Development, Indigenisation and Economic Empowerment Minister Patrick Zhuwao told delegates at a breakfast meeting.

“Foreign-owned businesses operating in reserved sectors may continue to operate but they should pay a levy. The levy will be moderated by the extent of their indigenisation compliance levels meaning that moderation will go from zero percent to 100 percent.

“We also expect all licencing authorities to stop issuing licences to any new business within the reserved sectors,” said Minister Zhuwao.

He said entities already operating within the reserved sectors will not qualify for a rebate on indigenisation.

“Entities operating within the reserved sectors will not qualify for rebates because they are already in the sector reserved for the locals.

“They will also not qualify for good corporate citizenship because already they have shown that they are not good corporate citizens by venturing into sectors meant for locals,” said Minister Zhuwao.

Minister Zhuwao said he is aware that the proposed 10 percent levy is potentially crippling to businesses but there will be a moderation depending on the companies indigenisation and empowerment plans.

“I am aware that 10 percent of any business is potentially crippling. I am proposing a 10 percent levy which can be moderated by the extent which any business chooses to comply with the Indigenisation Act.

“It effectively means that these entities as they plan, will now decide to what extent they want the levy moderated. I am proposing a levy at a high rate which is 10 percent of gross turnover and I am not running away from that statement,” said Minister Zhuwao.

Minister Zhuwao, however, said for him to impose the levy he needs to get the concurrence of Finance and Economic Development Minister Patrick Chinamasa and then get approval from Parliament. He said any company that does not regard the laws of the land automatically does not deserve support from Government.

“Refusal to comply is the same as refusal to go in line with the aspirations of the people of Zimbabwe,” said Minister Zhuwao.

“Existing businesses have had five years to comply and five years later we still don’t see those businesses complying. There are allegations of lack of clarity . . . there are allegations that there is one-size-fits all model and those allegations are untrue.

“We have general notices that deal with each and every sector.

“We are also using a provision within the Act, to be precise Section 17 of the Act which allows for the imposition of a levy to enable the funding of NIEEB and NIEEF. That provision also is a provision that we will use to enable adherence to the National Indigenisation and Empowerment Charter. It is also a provision that we will use to ensure compliance to the further indigenisation of the economy, and it is also a provision that we will use for the economic empowerment of Zimbabweans,” Minister Zhuwao said.

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