Confusion over Victoria Falls SEZ status

 PLAYERS in the tourism sector in Victoria Falls have called upon relevant authorities to speed up the operationalisation of the Special Economic Zone status of the city as it will be a key enabler to the recovery and growth of the tourism sector.

Tax rebates on different facets that include corporate tax, employee tax as well as customs duty on capital equipment and raw materials have been identified as a key enabler in the recovery and growth of the industry as they are part of the policies and regulations that operate within a SEZ.

The local authority is saying the city was gazetted as a SEZ in 2017 but the Zimbabwe Investment and Development Agency has reiterated that such a status has still not yet been approved. ZIDA public relations manager Ms Constance Makoni told Sunday Business that Victoria Falls was not yet a SEZ with relevant statutory approvals under the Ministry of Local Government and Public Works yet to be made.

“The City of Victoria Falls has not yet been gazetted as an SEZ — it has been designated as space that will be gazetted, but this is still work in progress that requires the relevant statutory approvals under the Ministry of Local Government and Public Works. There are still some running preparatory works being undertaken by the city with regards to spatial planning that will determine the extent of the city space and the gazetting is likely to be finalised after all these preparatory works have been completed,” she said.

However, Victoria Falls Mayor Councillor Somvelo Dhlamini said Victoria Falls already has a SEZ status which it was accorded in 2017.

“Victoria Falls was accorded a Special Economic Zone status in 2017 with two areas of speciality: finance and tourism. That being the case, the SEZ status complements the promotion of Victoria Falls as a preferred tourism investment destination. Victoria Falls had applied for the extension of its boundaries in 2012.

However, an inter-ministerial consultation recommended that there is no need to expand the City to curb over-development in areas close to the World Heritage Site. As a result, Central Government established the Masue integrated resort and Ndlovu satellite town to decongest Victoria Falls,” said Clr Dhlamini
Local tour operator Mr Clement Mukwasi called for the relevant authorities to clarify the status of the city to ensure that there is smooth recovery of the city.

“It actually encompasses quite a lot of benefits that come with the designation of that SEZ. Corporate tax at the moment ranges between 24 percent and 72 percent for the companies operating outside SEZ but if a place becomes a SEZ, the corporate tax is zero rated. This means for the first five years from the time the place is designated as a SEZ you actually do not pay tax which is a serious enabler to investment,” he said.

Mr Mukwasi said if corporate tax is zero rated for the tourism industry specifically, there will be quick recovery.
“At the moment employees both locals and expatriates are taxed using different bands from the lowest up to about 40 percent depending on the salary one gets but if one is now in a SEZ, specialised expatriated staff will now be taxed at a rate of about 15 percent which is actually key again in the attraction of best brands best service providers in the industry.”

He also said due to low business as a result of Covid-19, some equipment and resources used in different tourism activities was being dilapidated hence the need for rebates in customs duty for capital equipment and raw material.

“Things like helicopters as an example do not wear out only because of use, they also wear out because of being inactive but when you want to buy parts or import a new helicopter into the country you have to pay duty for such importation. However, if the place becomes a SEZ, the capital goods will have 100 percent rebate.

This is also a key enabler to the tourism industry because remember the tourism industry operates on an international turf in that the services that we give in Victoria Falls must be similar or better than the services given in Cape Town, New York, Amsterdam or any other tourism destination,” he said.

Ms Makoni also weighed in saying the gazetting of the City as a SEZ will focus on the development of products and activities that drive or are driven by tourism.

“The designation of the spaces as Special Economic Zone will help different sectors of the economy in many ways. However, as the Victoria Falls is a major tourism resort it is expected that any activities within the SEZ will be driven by activities that play a part in the tourism value chain,” she said.

Source: Confusion over Victoria Falls SEZ status (01/08/21)