Zimbabwe says empowerment levy targeting foreign firms won't be "too high"

The Zimbabwean government's planned indigenization levy will not be too high to avoid further burdening companies that are already struggling in the current tough economic environment, a cabinet minister said Monday.

Finance and Economic Development Minister Patrick Chinamasa told journalists that the decision was made after considering that most companies were struggling and as such the levy should not further cripple them.

"What will inform us and guide us is that we must not kill businesses, we must not kill the economy," Chinamasa said.

"Given that some of the companies are failing to pay taxes, it therefore means that any levy that we put in place must take into account the economic challenges the economy is facing. We have to set it at a level that does not cripple or further add a burden on the economy and also on businesses," he added.

The Zimbabwean government announced in January this year that it would introduce the Indigenization Compliance and Empowerment Levy for all foreign-funded companies which would vary depending on the companies' compliance with the indigenization law.

The law requires foreign-owned companies to cede majority shareholding to locals.

Chinamasa said money derived from the levy would be pooled into a fund that will be used to support empowerment programs.

Last year, Indigenization Minister Patrick Zhuwao proposed a 10 percent empowerment levy on foreign companies as part of efforts to generate internal resources to fund the indigenization program.

He said from projections, 93 million U.S. dollars could be raised annually from the levy.

However, Chinamasa said consultations to determine the levy were yet to begin. Endit