Zimbabwe Eyes Tax Breaks for Diamonds

November 10, 2014 Taxation in Zimbabwe

HARARE – Zimbabwe is looking to create a strong national industry for diamond cutters and polishers by using a targeted tax break.

Late last week at a conference held in Harare the Mines and Mining Development Minister of Zimbabwe Walter Chidhakwa indicated that early next year the government could drop some of the taxes levied on diamonds mined in Zimbabwe and exported out of the country.

The tax cut will be offered to manufacturers for diamonds that are extracted in Zimbabwe and sent to be cut and polished in the country, before being exported overseas.

The move is aimed at fostering the growth of a local diamond processing sector, and the Minister specifically stated that while the tax cut will lead to a reduction in tax collections, it will also result in higher levels of employment, education and welfare for people in Zimbabwe.

Some experts have indicated that if more diamonds are processed locally, the problems of smuggling and under-invoicing will also be reduced, as there will be less incentives for the diamonds to be taken out of the country without record.

Currently the sale of diamonds on Zimbabwe is subject to a tax of 15 percent, however, under the proposal described by the Minister, the rate would be dropped to zero for locally processed diamonds.

Photo By: Steve Jurvetson