Zanzibar’s new tax and residency investment scheme set to open paradise to the world

 

The government of Zanzibar, one of Africa’s most prized travel destinations, has announced that a new tax and residency program is now available for foreigners wanting to live and invest in the island.

Until now, the Investments Act of 2018 provided procedures and criteria for Strategic Investment Status (SIS) projects with incentives and allowances to real estate developers, however the same was not offered to those wanting to buy property in the country.

The result has been that Zanzibar has not been able to attract any notable real estate development, where countries like Mauritius, Dubai, Oman, Singapore and others have thrived after implementing this strategy.

With the introduction of the new investor programme, announced by the Government on Tuesday, foreign buyers will now be afforded the opportunity to enjoy a number of benefits, thereby luring investment and boosting Zanzibar as well as the broader Tanzania’s economy.

Real estate investors are now able to acquire a residency permit as an investor, meaning the party will be allowed to live in Zanzibar as a non-citizen. They are also not required to live in Zanzibar permanently.

New tax and residency benefits for real estate buyers:

1) No income tax on worldwide income and wealth

2) Resident permit for VILLA buyer plus Partner and up to four children under 20 years of age

3) First buyer pays only 50 per cent of normal capital gains on sale of unit, at 5 per cent instead of 10 per cent

4) Foreign ownership allowed

5) Registration of ownership to be done by Zanzibar Investment Promotion Authority (ZIPA)

6) No VAT on unit rental or sales

7) Income tax is halved only on local income - 15 per cent instead of 30 per cent (applicable to foreigners only)

8) Repatriation of profit is allowed after tax

9) Residence permits are only valid for the duration the buyer owns the property (renewable every two years at $3,050 for the main investor and $550 for each dependent)

10) No work permit is given, but may be applied for separately by the employer

11) No minimum stay is required to claim benefits

Business investors wanting to invest in ventures such as restaurants, bars, watersports and retail operations will receive similar benefits as real estate investors through approved “Strategic Investment” projects only.

Here is a list of new tax and residency benefits for business investors:

1) Foreign ownership is allowed

2) No business licence fees for the first three months

3) Company tax: Income tax free for first five years. After the first five years: 50 per cent (Income Tax is 30 per cent so it will only be 15 per cent)

4) Repatriation of profit allowed after tax

5) 100 per cent exemption on withholding tax on interest paid to foreign banks

6) Deduction of depreciation rate of 100% within five years

7) Residence and work permits for investor and employees.

Pennyroyal Ltd is the long-term investor, developer and manager of Blue Amber Zanzibar, and the first real estate project to be awarded SIS by Zanzibar’s government.

Blue Amber is a luxury mixed-use, waterfront, resort development spread across 411 hectares along the Muyuni coastline in the north-eastern part of Zanzibar. It incorporates residential, hotel, tourism, and community and public amenities.

It is the only “Strategic Investment” real estate development on Zanzibar with an untouched natural beach, offering views of pristine Muyuni Beach and Mnemba Island.

Construction of the first villa residences and visitors Centre commenced in the first quarter of 2020 and are due for completion within the next 18 to 24 months. Subsequent phases will include the development of further hotel, residential and retail sub-projects around the anchor developments.

Phase 1 of the project is expected to be completed in the next two years.

With the introduction of the new investment programme and its myriad of benefits, the developers are expecting to see great interest among buyers from abroad, especially against a backdrop of Tanzania bucking global travel trends last year.

Credit: https://gulfnews.com/