Tax Holidays Fact Sheet

What is a Tax Holiday?

It is a casual term used to define tax exemption. In terms of the laws of tax there are people and entities that may be exempted from paying tax for a fixed duration. Zimbabwe has been using these laws for a number of reasons chief among them being to attract investment and achieve industrial growth.

Is there a law that governs Tax Holidays?

Yes, tax holidays (tax exemptions) are governed by the tax law. The law allows tax exemption but it does not give detail. It is therefore guided by government policies like the investment policy. This policy is tied to the vision 2030 which seeks to achieve a middle income economy.

What are the advantages of Tax Holidays?

If properly implemented like the special economic zones and duty on imports, tax holidays attract investment. For any economy to grow in a sustainable manner there must be deliberate efforts to create such exemptions to attract Investment

What are the disadvantages of Tax Holidays?

Tax holidays maybe used as a tool to loot and promote corruption if they target individuals and there is no clear explanation on why one has been granted a Tax holiday. Any Tax holiday implemented with a political motive ceases to save the public interests. Tax holidays can be used as a source of unholy finances.

What is the problem with tax holidays exposed by the sentry report?

These tax holidays benefit a certain clique of the society, those who are political connected. They serve individual interests and ultimately benefit a cartel. Personalized tax holiday maybe legal but they are immoral.

What transparency and accountability issues are associated with tax holidays?

Tax holidays should be in the public interest, as a result there must be a clear criterion in place on how to grant tax holidays which criterion must be open for public scrutiny. The record of all the entities and individuals who are beneficiaries of tax holiday must be made public. Above all there must be a parliamentary vote before any person is granted tax holiday. The cost benefit analysis must be put to the public before and after the implementation of tax holiday.

What is ZimRights doing about this issue?

ZimRights has applied to both ZIMRA and Ministry of Finance demanding information in relation to tax holidays that have been granted and more specifically on the Great Dyke tax break. The application aims to achieve transparency and accountability in the tax regime. ZimRights also advocates for transparency and accountability through engagement with the relevant stakeholders as well as disseminating information in relation to tax holidays.

How can citizens respond to protect their rights?

Every citizen has a right to demand information with regards to how governance issues are implemented. Citizens have a right to get information on how and who is granted tax holidays and the reasons leading to the granting of that tax break and how it will benefit Zimbabwe and its citizens. Citizens can write to the relevant authority seeking information which may enhance public accountability and transparency.

Source: ZimRights

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