A RECENT survey by ZimTrade has revealed that local companies were not enjoying reduced corporate tax benefits as they were failing to surpass the 50% export benchmark set by government.
By Tarisai Mandizha Business Reporter
According to the survey, most companies were exporting below 40% hence their failure to benefit from the tax relief.
Average capacity utilisation for most industries stood at 37,5%, a much lower rate than expected and also lower than for 2010.
Speaking at the launch of the survey results in Harare recently, Africa Corporate Advisers executive director Mike Nyamazana said only 40% of the companies were currently exporting their products while the majority were not exporting mainly due to export costs and high production costs.
“Of those currently exporting, the results show that they are exporting about 40% of their total production,” Nyamazana said.
“This is high level production, but leaves the companies without any incentives as the threshold to qualify for a 5% reduction in corporate tax is export of 50% of the total production,” Nyamazana said.
“The firms mentioned that they cannot export because of the challenges they are facing locally.”
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According to the survey, South Africa was the leading export destination for Zimbabwean products accounting for 60% of Zimbabwe’s total exports while other significant export destinations include the European Union, China, the United Arab Emirates and Mozambique.
The survey said 52% of the companies in Zimbabwe were facing competition from foreign firms with South Africa at 34% and China 33%
“Those already exporting indicated that there is great potential for increasing the exports. The firms indicated that once the government comes up with export supporting policies, most firms will be able to increase their levels of exports as the capacity to do so was there,” Nyamazana said.
He appealed to government to review the 50% export threshold for accessing corporate tax relief, help in industrial retooling, reform the domestic business regulatory framework and rationalise the tariffs regime.
