THE government has suspended the Investor Protection Levy for the next 12 months as it seeks to boost the performance of the local bourse and Central Securities Depository.
Statutory Instrument 108 of 2014 states that the Minister of Finance and Economic Development has in terms of the Securities Exchange Act approved the changes.
In an interview the chief executive officer of the Securities Exchange Commission of Zimbabwe Tafadzwa Chinamo said “The investor protection levy has been suspended to pave way for the Zimbabwe Stock Exchange and the Central Securities Depository to be able to financially implement their projects. The boost will be for 12 months while the system is running. But after 12 months we will resume charging the investor protection levy,” Chinamo said.
He said the scrapping of the investor protection levy has been necessitated by the $6 million that is in the Investors Fund.
“The fund is $6 million so it is adequate to cater for any incidences that can occur, and also the fact that up to now there has not been any drawdown from the fund,” he said.
Chinamo said the commission would be looking at the capital gains withholding tax to make sure that it is charged on actual gains.
He said currently the capital gains tax was being charged whether an investor makes a gain or not which is not fair on the investors.
The total transaction cost on ZSE is 4,21% made up of brokerage fee (1%), Securities Exchange Commission levy (0,18%), investor protection levy (0,05%), ZSE levy (0,10%) and stamp duty (0,25%) on buyers.
There is also a capital gains withholdings tax of 1% on sellers and value added tax of 0, 15% (which is 15% of brokerage).
With the suspension of the central securities depository levy and Zimbabwe Stock Exchange levy, the total transaction cost now stands at 4,18%.
The delays in the gazetting of the central securities depository levy has been hampering the launch of the Central Securities Depository, a system that holds and administers securities as well as enabling transactions to be processed by means of book entry.
The central depository levy was also gazetted under the Statutory Instrument 108.
The system has been on mock runs since last month with all the relevant stakeholders participating. SECZ approved the establishment of a CSD to be run by Chengetedzai Depository Company under a one-year licensing deal.
Chengetedzai won the tender in 2010 and it has taken long for the system to be operational due to various challenges. Government entities, which include the Infrastructure Development Bank, ZB Holdings and the National Social Security Authority, will hold 51% of the CSD firm.