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Investment & Legal Framework
REASONS TO INVEST IN ZAMBIA INVESTMENT INCENTIVES
Zambia is a multi-party democracy and provides a
market-oriented liberalized economic environment
within a safe, strife-free, multicultural society. The
Zambian Government is extremely welcoming to
investors across all sectors and has developed an
investment and legal framework that provides incen-
tives for new and established investors to enter the
Zambian market. The government hopes that the in-
vestor friendly environment that it has helped create
will result in an increase in the levels of investment,
international trade, as well as increased domestic
economic growth.
The country’s central location in the region, as well
as a combination of the following key strengths
makes it an ideal investment location:
•Abundance of natural resources and manpower,
which are highly under-utilized.
•Political Stability since attaining independence in
1964
•Abolition of Controls on: prices, interest rates, for-
eign exchange rates, free repatriation of debt repay-
ments
•100% repatriation of net profits
•Guarantees and Security to investors with legislated
rights to full and market value compensation
•Duty Free Access to Regional, wider African, and
US markets under SADC (Southern African Devel-
opment Community), COMESA/FTA (The Common
Market for East and Southern Africa), and AGOA (Af-
rican Growth and Opportunity Act) respectively
•Banking, Financial, Legal and Insurance services of
international standard as well as a reputable Stock
Exchange
•Double Taxation Agreements with a number of Eu-
ropean, North American, African and Asian countries
•Great place to work and live – sub-tropical cli-
mate and vegetation with plenty of water. Zambia’s
friendly people mostly speak English and have a
high literacy rate. Educational establishments exist
throughout the country as well as several reputable
Universities. Beautiful wilderness to be enjoyed (na-
ture reserves, game parks, rivers, lakes and water-
falls and more)
•Thriving Private Sector – Government has success-
fully privatized most of the previously state owned
enterprises, thus encouraging an entrepreneurial
culture.
The Zambia Development Agency (ZDA) Act of 2006
offers a wide range of incentives in the form of allow-
ances, exemptions & concessions for companies.
The Act provides investment thresholds that inves-
tors have to meet to qualify for fiscal and non-fiscal
incentives. There are five categories of investors
who can be considered under the ZDA Act.
The first is that of investors who invest US$ 10 mil-
lion or above in an identified sector or product. This
category of investors is entitled to negotiation with
the government for additional incentives other than
what they might already qualify for under the ZDA
act.
The second category is that of investors who invest
US$ 500,000 or more into the Multi Facility Econom-
ic Zones (MFEZ) and /or in a sector or product of
a priority sector or a priority product under the ZDA
Act. This category, in addition to being entitled to the
general incentives, is entitled to the following incen-
tives:
•Zero percent tax rate on dividends for 5 years from
year of first declaration of dividends.
•Zero percent tax on profits for 5 years from the first
year profits are made. For year 6 to 8, only 50 per-
cent of profits are taxable and years 9 & 10, only 75
percent of profits are taxable.
•Zero percent import duty rate on raw materials,
capital goods, and machinery including trucks and
specialized motor vehicles for five years.
•Deferment of VAT on machinery and equipment in-
cluding trucks and specialized motor vehicles.
The third category of investors is designated as mi-
cro or small enterprises under the ZDA Act. Like the
second category, this category is also, in addition to
the applicable general incentives, entitled to the fol-
lowing incentives:
•For an enterprise in an urban area the income shall
be exempt from tax for the first three (3) years.
•For an enterprise in a rural area the income shall be
exempt from tax for the first five (5) years.
The fourth category is that of investors who invest
less than US$500,000 in a sector or product iden-
tified within a priority sector or considered to be a
priority product under the ZDA Act. This category is
only entitled to general incentives.
The fifth and last category is that of investors who
invest any amount in a sector or outside of a ZDA