Russian investor happy with tax holiday

Great Dyke Investments (GDI), the investment vehicle behind the Darwendale Platinum Project, has commended Government for fulfilling its promises to investors, saying this will catapult Zimbabwe to the zenith of investment destinations.

The call came as Government last week gazetted Statutory Instrument (SI) 26 of 2021, which gave GDI a tax holiday for the next five years.

A tax holiday is a temporary reduction or elimination of a tax, which has been utilised by several Governments the world over in a bid to spur investment.

In an interview after the gazette, GDI vice chairman Igor Higer, said the granting of the exemption is a result of a promise that Government made to Russia.

“So from an investor point of view, the most important thing here is the stability and the evidence that when the Government of Zimbabwe promises something, they deliver.

“So obviously gives us the comfort to continue investing in the country and to develop the project as per agreed road map.

“I don’t want to appear to be talking for other investors because I really can’t do that but these things are what investors look for.

“I can assure you that with such interventions GDI will be a good success story and everything on the project is going on well in terms of agreed roadmap,” he said.

According to a 2018 United Nations report on Design and assessment of tax incentives in developing countries, tax holidays are a tool that has been relied upon not only in the developing world, but in first world countries too.

“As a matter of fact, developed countries normally use tax incentives to promote research and development activities, export activities, and support the competitiveness of their enterprises in the global market,” notes the UN report.

“Developing countries use them to attract foreign investment and foster national industries,” reads the report.

Among several benefits, the UN reports further notes that if properly designed and implemented, tax incentives are a useful tool for attracting investments that would not have been made

without the provision of tax benefits.

In addition, notes the report, tax incentives do not require an expenditure of funds by the Government as do some alternatives, such as the provision of grants or cash subsidies to investors.

This justification makes the tax holiday option more applicable to Zimbabwe’s situation as Government cannot afford the kind of grants needed to spur a capital intense mining investment.

The Darwendale Platinum Project is one of the key anchors with which Government expects to foster mining sector growth as well as create employment.

Current site works are centred on the development of two mining portals whose engineering work is envisaged for completion in March.

The two portals are expected to produce upto 3, 5 million Tonnes of platinum ore once full production kicks in later this year.

The project has to date seen hundreds of workers been taken on board in line with the President’s wish of employment creation.

Speaking during a tour of the mine in September last year, GDI Chief Operating Officer Mr Munashe Shava said the mine was, at that time, employing 450 workers.

Of those employed, 70 were on full-time contracts with the rest on the books of contracted companies which are partaking in mine development works. -ebusinessweekly.cozw