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Zimbabwe says to levy 10 pct on foreign firms in "reserved" sectors

Xinhua, January 15, 2016 Adjust font size:

Foreign firms operating in reserved sectors of Zimbabwe's economy will be required to pay a 10 percent empowerment levy for non- compliance with the law, a cabinet minister has said.

The country's Indigenization and Economic Empowerment Act that was promulgated in 2007 compels foreign firms to give majority shareholding to locals and reserves certain sectors for locals.

However, there are a number of foreign firms operating in reserved sectors that include primary production of food and cash crops, passenger transportation, retail and wholesale trade, beauty salons, estate agencies, bakeries, cigarette manufacturing, valet services, milk processing and grain milling.

Youth Development, Indigenization and Economic Empowerment Minister Patrick Zhuwao was quoted by the Herald newspaper Friday as saying that non-compliant firms could be levied up to 10 percent of their gross turnover although the levy could be moderated up to 100 percent on the basis of compliance.

The levy, however, still needs to get the nod of Finance Minister and to be approved by Parliament, the minister said.

"Foreign-owned businesses operating in reserved sectors may continue to operate but they should pay a levy.

"We also expect all licensing authorities to stop issuing licenses to any new business within the reserved sectors," the minister said.

The minister said firms operating in reserved sectors will also not qualify for a rebate on indigenization and for good corporate governance, measures that were recently unveiled by the government to reward firms that are compliant and penalize those not compliant with the law.

The government has since given foreign firms up to March 31 this year to submit their indigenization and empowerment plans after missing the Jan. 2014 deadline.

The minister said he was aware that the proposed 10 percent levy is potentially crippling to business but added that there will be moderation depending on companies' indigenization and empowerment plans. Endit