Beverages manufacturer, Varun Beverages, has been declared a special economic zone, as Government seeks to incentivise the firm that is reportedly planning to put up a new $23 million plant.
Varun Beverages has already set up a $40 million beverages plant that produces a range of products that include Pepsi, Mirinda, Mountain Dew and 7Up.
In June last year, the company launched its plant, which has an installed capacity of 600 000 bottles per day.
In an Extraordinary Government Gazette dated February 8, 2019, Zimbabwe Special Economic Zones Authority chief executive officer Mr Edwin Kondo, said Varun Beverages had indeed been declared a special economic zone.
“It is hereby notified that, in terms of section 20 (1) of the Special Economic Zones Act (Chapter 14:34), the Zimbabwe Special Economic Zones Authority, has declared Varun Beverages (Zimbabwe) (Private) Limited as a special economic zone.
“The zone is located on a certain piece of land situated in the district of Salisbury called Stand 1824 Ardbennie Township of Ardbennie Township 2 of Subdivision A of Ardbennie, measuring 7,379 7 hectares and held under Deed of Transfer 1217/17,” said Mr Kondo.
Industry and Commerce Minister Nqobizitha Mangaliso Ndlovu, told The Herald Business last Friday that Government decided to declare Varun Beverages a special economic zone considering that the firm wants to ramp up its operations in the country.
“They are expanding; they are putting a plant which is worth more than $23 million and they have to improve their reach out in the country, their access.
“They also want to improve exports because they have already started exports so a special economic zone, really, grants them corporate tax relief not VAT relief for a period of five years.
“At least if people are bringing in such investment, as Government we also make an effort to support them through such kinds of incentives. That is mainly the implications of the special economic zone,” said Minister Ndlovu.
Varun Beverages’ soft drinks are currently dominating the market in the absence of Delta Beverages’ products such as Coke and Fanta due to foreign currency shortages. Government introduced the idea of special economic zones in a bit to attract more investors, especially those that have been complaining about the cost of operating a business in Zimbabwe.
Some of the benefits of special economic zones include corporate tax exemption for the first five years of operation and a corporate tax rate of 15 percent thereafter.
Specialised expatriate staff will also be taxed at a flat rate of 15 percent while there is also scope for duty-free importation of capital equipment and exemptions for non-residents withholding tax on royalties.
Raw materials and intermediate products imported for use by companies in special economic zones will also be imported duty-free, but the exemption does not apply where raw materials are produced locally.
It could not be immediately established if Varun Beverages will enjoy all the benefits of a special economic zone.
As at December last year, Varun Beverages’ total investment in the country was almost $50 million.
Source : The Herald.