Happiness Zengeni and Tinashe Makichi Harare Bureau
Reserve Bank of Zimbabwe Governor John Mangudya has said the Indigenisation Compliance and Empowerment Levy which will be levied on all business should be seen as progressive and market friendly as it favours those who choose to comply with the laws of Zimbabwe.
Under the new Frameworks, Procedures and Guidelines for implementing the Indigenisation and Economic Empowerment Act announced yesterday, an Indigenisation Compliance and Empowerment Levy at a rate to be prescribed shall be levied on all businesses.
Companies that comply will benefit from an indigenisation rebate.
According to the framework, a standard formula based on a prescribed rate, that is linked to the annual gross turnover of the business entities will be determined in establishing the extent to which the individual entities are supporting socially and economically desirable objectives.
The levy is subject to reduction by the Compliance and Empowerment Rebate score earned by any business.
“Effectively this Indigenisation Compliance and Empowerment Levy can be significantly moderated by the extent to which a business simply decides to comply with the laws of Zimbabwe on indigenisation and economic empowerment,” reads part of the framework.
Mangudya who supported Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao and Finance and Economic Development Minister Patrick Chinamasa at a press conference yesterday said the levy was progressive and market friendly as only those who did not wish to comply with the Indigenisation Act will pay it.
“Going forward we expect the economy to move in tandem with expectations. The Compliance and Empowerment Levy is a progressive levy where the non-compliant will pay more and the compliant will pay zero. This is a market friendly policy that simply states that those who choose not to comply pay more and those who comply pay nothing,” said Mangudya.
Minister Chinamasa said the government was however yet to come up with a figure on the new levy but said the money would be pulled into a fund that will be used to support empowerment initiatives by disadvantaged groups.
The framework states that the Indigenisation Compliance and Empowerment Rebate Score shall be calculated against the Indigenisation Compliance and Empowerment Levy in such a manner that any business shall be able to reduce the levy payable by it according to the rebates it has earned.
The rebate can be earned from indigenisation legislation compliance rebates, good corporate citizenship rebate and indigenous shareholding rebates. A maximum possible 100 percent Rebate Score will mean that a business has effectively complied with the Indigenisation programme and does not need to pay the levy.
Mangudya also said that following the announcement of the new framework, the country is now ready and open for business.
He reiterated that 2016 is a transformative year and the Indigenisation law is one of the agendas on the desk which had been lagging behind. “Having gone through the frameworks I’ve come to the conclusion that Zimbabwe is ready for business,” said Mangudya.