For a long time, Mauritius has been the number one location for foreign corporations seeking to establish a tax base in Africa, but that fact is now in jeopardy as Mauritius’ neighbor, Zanzibar, has just presented a challenge. The Tanzanian island has introduced a new free tax and residency program for expats who want to live and invest there. The move follows a slew of infrastructure and tourism-friendly improvements that helped the Tanzanian region survive much of the storm that the Covid-19 outbreak wreaked in 2020.
What Benefits Do Businesses Obtain From New Scheme?
There are a range of tax benefits for businesses under the new tax regime: These are that:
1) Foreign ownership is permitted.
2) For the first three months, there are no company license fees.
3) Company tax: For the first five years, the company is tax-free. After the first five years, 50% (Income Tax is 30 percent so it will be 15 percent )
4) Profit repatriation is permitted after tax.
5) There is a 100% withholding tax exemption on interest paid to foreign banks.
6) A depreciation rate of 100% within five years is deducted.
7) Permits for investors and employees to live and work in the country.
A Special Case For Real Estate Developers
Previously, the Investments Act of 2018 specified procedures and requirements for Strategic Investment Status (SIS) projects, as well as incentives and allowances for real estate developers, but not for individuals looking to purchase property in the country.
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Foreign buyers will now be able to take advantage of a range of perks as a result of the new investor program, thereby luring investment and improving Zanzibar’s and Tanzania’s economies.
The following are new tax and residency perks for real estate buyers:
1)There is no income tax on global income and wealth.
2) Resident permit for the VILLA buyer, his or her partner, and up to four minor children under the age of twenty.
3) The first buyer pays only half of the regular capital gains on the sale of the unit, instead of the full 10%.
4) Foreign ownership is permitted.
5) The Zanzibar Investment Promotion Authority will register ownership (ZIPA)
6) There is no VAT on the renting or selling of units.
7) The income tax rate on local income is cut in half, from 30% to 15%. (applicable to foreigners only)
8) Profit repatriation is permitted after tax.
9) The buyer’s residence permit is only valid for the life of the property’s ownership (renewed every two years for $3050 for the primary investor and $550 for each dependent).
10) No work permit is issued, but the employer may apply for one independently.
11) There is no requirement for a minimum stay in order to get benefits.
How To Apply For The Benefits
To know more, visit here.
Zanzibar Africa free tax Zanzibar Africa free tax
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer