Govt introduces more incentives for SEZs licensed companies

New incentive under corporate tax has been crafted to lure investors to the country’s Special Economic Zones ( SEZs).

The Statutory Instrument ( SI) 89 of 2021 gazetted last month has promulgated the Income Tax, Special Economic Zones Development Approval Order of 2021 ( SEZs Order) which provides that the income that accrues to an investor or developer, who has been approved as a SEZ area licensed business, from their operations in any special economic zone shall be taxable at a special rate of five percent for the first ten years of operation and ten percent thereafter. The Country Managing Partner of Ernest & Young, Bakani Ndwapi said it is anticipated that many investors, both local and international, will want to take advantage of the opportunity to benefit from the various incentives being offered under special economic zones. “However, determining whether or not a business qualifies may raise complex technical and procedural issues for would- be investors and developers. “It is therefore recommended that would- be investors take time in setting up the operating framework in total conformity with what is required before an application can be made,” said Ndwapi, in a commentary issued by Ernest & Young, this week. He further advised investors to monitor their business activities to ensure alignment with approved business activities, once approval has been granted. According to government, the SEZA order shall apply to approved development projects or activities carried out by investors or developers in an area which has been declared a SEZ. The investor should have been licensed by SEZA to carry on business in special economic zone or exports 100 percent of their goods or services or has been exempted from the 100 percent requirement by the Minister for Trade and Industry in terms of the Special Economic Zones regulations. Currently, SEZs’ sites are located in Sir Seretse Khama International Airport, Gaborone Fairgrounds, Lobatse, Selebi Phikwe, Francistown, Palapye, Tuli Block and Pandamatenga. In 2015, government introduced the Special Economic Zones Authority ( SEZA), which was established through an Act of Parliament, the Special Economic Zones Act of 2015. As part of its mandate, SEZA is expected to meet the needs of Special Economic Zones enterprises as well as create business development opportunities for both SMEs suppliers, coupled with fiscal and non- fiscal incentives which include zero- rated VAT on raw materials for manufacturing for export, no exchange controls, full repatriation of profits and capital, waiver on transfer duty on land and property, duty- free imports of specialist plant and machinery for manufacturing purposes and five percent corporate tax for the first 10 years and 10 percent thereafter