Zanzibar’s government has announced a new tax and residency program available to foreigners to live on and invest in the island.
This game-changing measure comes on the back of significant infrastructural and tourism-friendly initiatives that allowed the Tanzanian region to weather most of the Covid-19 storm in 2020.
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, but it did not offer the same to those wanting to invest in real estate 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 recent introduction of the government’s new investor program, foreign buyers will now be afforded the opportunity to enjoy numerous benefits thereby luring investment and boosting Zanzibar and broader Tanzania’s economy.
Real estate investors can now acquire a residency permit as an investor, meaning the party will be allowed to reside in Zanzibar as a non-citizen. The are also not required to live in Zanzibar permanently.
The new tax and residency benefits for real estate investors:
- No income tax on worldwide income and wealth.
- Resident permit for VILLA buyer plus Partner and up to four children under the age of twenty years of age.
- First buyer pays only 50% of normal capital gains on sale of a unit, at 5% instead of 10%.
- Foreign ownership is allowed.
- Registration of ownership to be done by Zanzibar Investment Promotion Authority (ZIPA).
- No VAT on unit rentals or sales.
- Income tax is halved on local income only. 15% instead of 30% (applicable to foreigners only).
- Repatriation of profit allowed after tax.
- A residence permit is 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).
- No work permit granted, but it may be applied for separately by the employer.
- No minimum stay required to claim benefits.
Business investors wanting to invest in ventures such as restaurants, bars, water sports and retail operations will receive similar benefits as real estate investors through approved ‘Strategic Investment’ projects only.
New tax and residency benefits for business investors:
- Foreign ownership allowed.
- No business license fees for first three months.
- Company tax: Income tax free for the first five years. After the first five years, 50% (Income Tax is 30% so it will be 15% only).
- Repatriation of profit allowed after tax.
- 100% exemption on withholding tax on interest paid to foreign banks.
- Deduction of depreciation rate of 100% within five years.
- 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 island. 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 visitor’s centre commenced in the first quarter of 2020 and are due for completion within the next eighteen to twenty-four 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 program 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.
The country, and Zanzibar in particular, surpassed expected visitor numbers in 2020 despite enormously unfavourable conditions stemming from the pandemic.
Tanzania recorded more than 620 000 foreign tourists in the 2020/2021 financial year – almost 200 000 more than was anticipated.
The speedy implementation of Standard Operating Procedures requiring visitors to present medical proof of their Covid-19 status, measures that also applied to stakeholders in the local tourism sector, played a key role in the country’s success.
The effective strategies implemented by the government caught the attention of the World Travel and Tourism Council, which awarded Tanzania a ‘Safe Travels Stamp’ in August – a major feat considering international fears around Covid-19.
From the time, the pandemic arrived on African shores, the country’s leaders were proactive in their approach, forging ahead with plans to make Tanzania more attractive to foreign investors.
In January, Zanzibar president Hussein Ali Mwinyi signed a memorandum of understanding for the construction of a $230 million port in North Unguja.
Once completed, the project will include berths for containers, liquid bulk goods, natural gas offshore services and infrastructure for the rehabilitation of marine vessels.
In July, Terminal 3 at Amani Karume International Airport (AAKIA), will be opened to improve the quality of services and customer care for visitors to the island.
Source: Propertywheel.co.za | https://propertywheel.co.za/2021/06/new-tax-and-residency-investment-scheme-set-to-open-zanzibar-to-the-world/