Furore as Zim exempts Huawei from tax obligations

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 05 Feb 2020
The tax exemption comes as Zimbabwe’s economy faces serious challenges.
The tax exemption comes as Zimbabwe’s economy faces serious challenges.

Zimbabweans are up in arms on social media after the government exempted Chinese telecommunications giant Huawei from paying tax.

This after minister of finance and economic development Mthuli Ncube updated a decree, Statutory Instrument 125 of 2020.

The updated decree backdates the exemption of tax to December 2009, cancelling all tax obligations for Huawei.

Huawei’s tax exemption comes as Zimbabwe’s economy is facing serious challenges.

The Economist Intelligence Unit has predicted the country’s economy is likely to shrink by 13% in 2020, as the southern African country faces a third consecutive year of drought.

Earlier this year, the World Food Programme listed Zimbabwe among the countries in Sub-Saharan Africa that will dominate global hunger hotspots in the first half of 2020.

Faced with targeted sanctions imposed by the West, Zimbabwe is leaning towards Chinese companies such as Huawei, among others.

Although the US imposed a ban on Huawei, the company continues to enjoy the trust of African countries and operators on the continent.

The Chinese firm is building 4G and 5G mobile networks throughout Africa and working with national governments across the continent.

Although it finds itself caught in the middle of a crossfire between the US and China, Huawei’s revenue is unlikely to take a thrashing “anytime soon” as a result, says GlobalData.

The data and analytics company indicates Huawei generated 52% of its global revenue from its domestic market China in 2018. In addition, the Europe, Middle East and Africa region accounted for 29% of revenue in the same year.

Said one Twitter user following the announcement: “Dear @MthuliNcube. We are disgusted by the fact that you have given a rich, Chinese tech giant, @Huawei a tax break that dates back to 2009 in circumstances where local corporates & individuals are choked to death by ZIMRA [Zimbabwe Revenue Authority]. What explanation exists for this irrational decision?”

Another one tweeted: “@MthuliNcube so you tax poor zimbos 2% including pensioners getting less than $100 USD per year? Yet u exempt tax for a Rich foreign company? Why do u hate Zimbabweans so much?” [Sic]

“Tax break for the Chinese whilst breaking its own citizens. Zimbabwe!!!” Another one posted.

Click here to view Statutory Instrument 125 of 2020 which exempts Huawei from paying tax in Zimbabwe.