Tuesday, October 7, 2008

US firms granted tax break in Zambia economic zone

Zambia has extended tax waivers to US firms seeking to invest in an economic zone initially created for Chinese companies that plan to invest $900-million in manufacturing of copper products, a minister said on Monday.

Felix Mutati, the commerce and trade minister also said South Africa's property firm HBW Developers has been awarded land to construct a shopping mall and offices opposite the Chambishi multifacility economic zone at a cost of $160-million.

Mutati said firms manufacturing computer software, vehicle spares and other products from the US would be part of investors in the economic zone and that they would enjoy the same tax benefits as Chinese companies.

"The Chinese have been courting major US firms operating in China to come and invest here and we will offer them tax incentives as well," he said. "This will also apply to any other foreign companies regardless of where they are coming from."

Mutati said the Chinese would also construct 3 000 houses in the economic zone.

China Non-Ferrous Metals Corp., (CNMC) is already constructing a $250-million copper smelter in Chambishi, 420 km north of the capital Lusaka, where the government has zero-rated corporate tax for the first five years of operations and deferred payments of 16% value added tax.

Mutati said the government had also waived the tax on dividends and customs duty of capital equipment, in a move which has attracted 50 Chinese firms so far.

"We expect that the opening up of the zone to other global players will attract more investments and create more jobs," he added.

Mutati said an initial 6 000 direct new jobs would be created in the Chambishi zone with an additional 15 000 indirect employment created by local contractors who would be supplying various goods and services to the foreign firms.

He said South Africa's HBW Developers and a local firm, Phoenix Supplies, would jointly invest a total of $190-million in a shopping mall in Chambishi, including the expansion of a shopping mall in the capital Lusaka at a cost of $30-million.

Zambia has in the last five years liberalised its investment policies awarding tax incentives to foreign companies in a bid to grow the economy, create wealth and employment for its impoverished citizens. Treasury data shows that 64% of Zambia's 12-million people live in abject poverty.