Effectiveness and Economic Impact of Tax Incentives in the SADC ...

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Table 7-5 (continued) Sheet 4 of 4 Country Investment Tax Credit (ITC) Angola f None indicated None (employment subsidy instead) Botswana None 200% deduction for cost of approved training for citizen employees Excess Deductions for Employment and Training Export Tax Incentives No free trade zones; exporters exempt from excise tax No export zones or export incentives other than rebate on raw materials sourced outside SACU for exports outside SACU Dr Congo None indicated None indicated No free trade zones; approved companies exempt from export duties and taxes; see initial allowance (previous page) Lesotho None indicated 125% for training or tertiary education costs for manufacturing companies Malawi None indicated Additional 50% of training cost for employee to earn degree, diploma or certificate Mauritius 10% on investment by companies in certain categories other than tax incentive companies, such that tax payable is not less than 15% Mozambique a 5%, 10%, 15%, 20% or 30% ITC depending on location, sector, and size of project) on eligible fixed assets; add 3% for tourism; credit c/fwd expires after year 5 Namibia None indicated Manufacturers qualify for additional deduction on training expenses [amount?], and 25% additional deduction for production line wages Duty free imports for manufacture of goods to be exported outside SACU Exporters may have EPZ or bonded status; zero corporate tax and dividend tax; zero import duty and indirect tax inputs; allowance of 12.5% of gross export sales; additional 25% allowance on transport costs None indicated Free trade zones; 15% company tax rate. Other exporters zero duty and VAT on scheduled inputs; double deduction of export marketing costs; tax credit of 15-40% on export volume such that tax not less than 15% None indicated Industrial Free Zones function as EPZ except labor laws apply; also 60% reduction on company tax for 10 years EPZ companies exempt from all taxes and duties; additional deduction of 25% to 75% on costs for export promotion and marketing; 80% allowance on taxable income from export of manufactured goods (excl. fish and meat) Seychelles None indicated None indicated 15% tax rate for export companies under IPA; zero tax on offshore companies operating in international trade zones \b South Africa None indicated Additional deduction up to R50,000 per employee under approved learnership programs. Swaziland None indicated 200% deduction for cost of approved training expenses (1) Companies in Ind. Dev. Zones zero duty and VAT on inputs. (2) Automotive exports (MIDP) obtain import duty credits as function of domestic content of exports. (3) Other companies that manufacture or process exports get rebate or drawback of duty on some imported inputs. (1) Free trade zones; (2) duty credit certificate scheme for textile and clothing exporters Tanzania None indicated None indicated (1) 10 -20 year holiday for EPZ companies, followed by 25% tax rate (details depend on location); holiday includes withholding tax; outside EPZ, duty drawback scheme applies Zambia c None indicated None indicated EPZ Act implemented 2003 provides; provides for standalone EPZ sites; in addition to standard EPZ tax benefits, also provides full exemption from corporate tax, withholding tax, capital gains tax and excise duty. Zimbabwe d None indicated Double tax deduction on wages and salaries for additional employees in manufacturing [SADC review] Notes for Table 7-5 are on the next page. EPZ at industrial parks or stand-alone: 5 year tax holiday then 15% rate; no w/holding tax on dividends etc.; tax reduced by 10 percentage pts for manufacturer exporting > 50% of output; 200% deduction for export development market costs.
Notes a Mozambique information Council of Ministers Decree 16/2002, CPI, IMF, and Globeafrica. For inconsistencies, the Decree is assumed to be correct. b Information on offshore business in the Seychelles is from SIBA website. c Information about EPZ incentives in Zambia obtained from MCTI website; 10 year c/fwd for mining is from ZIC via ipanet website. d Information on Zimbabwe supplemented from Zimbabwe Revenue Authority website, IMF tax summary 2001 and Ernst & Young Budget Proposals 2003. e Assumes that after-tax income is fully distributed at standard dividend tax rate to residents. For Botswana the combined tax is computed as follows: On income of 100, ACT = 10 and 15% of dividend payout (75) = 11.25. After offset, the dividend tax is 1.25, which is added to the company tax. f SADC database information supplemented from recent IMF Tax Summary g SL = straight line; DB = declining balance; table assumes SL if not otherwise indicated SOURCE: SADC Tax Database, August 2003, unless otherwise noted
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TECHNICAL REPORT Effectiveness and
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Contents Executive Summary xi 1. In
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Contents (continued) ILLUSTRATIONS
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Glossary ACT additional company tax
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Preface The Scope of Work (SOW) for
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PREFACE IX Export Development & Inv
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XII EFFECTIVENESS AND IMPACT OF TAX
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XIV EFFECTIVENESS AND IMPACT OF TAX
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XVI EFFECTIVENESS AND IMPACT OF TAX
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XVIII EFFECTIVENESS AND IMPACT OF T
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1. Introduction Why should schemes
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INTRODUCTION 1-3 well administered.
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INTRODUCTION 1-5 from selective to
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2. Taxation, Investment, and Growth
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TAXATION, INVESTMENT, AND GROWTH 2-
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3-2 EFFECTIVENESS AND IMPACT OF TAX
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3-10 EFFECTIVENESS AND IMPACT OF TA
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Page 84 and 85: 5-6 EFFECTIVENESS AND IMPACT OF TAX
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Page 95 and 96: 6. Economics of Harmful Tax Competi
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Page 111 and 112: TAX SYSTEMS AND INCENTIVES IN THE S
Page 131 and 132: Table 7-5 Elements of Tax Structure
Page 133: Table 7-5 (continued) Sheet 3 of 4
Page 137 and 138: 8. Conclusions and Recommendations
Page 139 and 140: CONCLUSIONS AND RECOMMENDATIONS 8-3
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Page 154 and 155: A-2 APPENDIX The present investment
Page 156 and 157: A-4 APPENDIX Democratic Republic of
Page 158 and 159: A-6 APPENDIX Government revenue in
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Page 162 and 163: A-10 APPENDIX (though they are obli
Page 164 and 165: A-12 APPENDIX • • • Asset All
Page 166 and 167: A-14 APPENDIX also get zero import
Page 168 and 169: A-16 APPENDIX EPZ measure was motiv
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Effectiveness and Economic Impact of Tax Incentives in the SADC ...

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