Import Tax Cuts In Zimbabwe's Mid-Year Budget Review

by Lorys Charalambous, Tax-News.com, Cyprus

23 July 2009

Zimbabwe’s Finance Minister, Tendai Biti, has announced a raft of import tax cuts for fuel, capital goods and raw materials in a mid-year budget review, in an attempt by the new unity government to put the economy on a growth path.

He said that a major challenge that remained to the 2009 budget is the low level of revenue inflows. In addition, he continued, there is an absence of adequate external budgetary financial support.

He noted that gains experienced with tax collections during the first half of the year had been largely obtained from increased spending, rather than being rooted in enhanced production or investment. In that regard, to reduce the cost of capital and attract additional foreign investment, the 10% withholding tax on non-residents receiving interest from Zimbabwe has been abolished with effect from 1 August 2009.

In order to encourage the development of ICT in line with international trends, the rates of customs duty on computers, printers and cellular telephones were cancelled from the same date. In addition, customs duties on raw materials, intermediate goods and capital goods were reduced further or, in some cases, suspended completely. The suspension of customs duty on some basic commodities has also been extended to the end of the year.

In a similar fashion, to encourage productive activity, while the rates of excise duty on locally produced cigarettes and tobacco, and on wines and spirits, have been increased by up to one-third, the specific excise duty on fuel has been reduced by 20% with immediate effect.

Recommended