Zanzibar offers tax benefits for residency, real estate investors

FROM MOHAMED ISSA

Zanzibar is aiming to join countries like Mauritius, Dubai, Oman and Singapore that have attracted property investors by offering three special categories of investors tax incentives and residence permits for non-citizens.

The islands are in the process of reviewing the law through their Zanzibar Investment Promotion Authority (ZIPA) to include homebuyers, academics and retired celebrities as new categories of foreign investors who can settle in the archipelago once that year is completed.

ZIPA managing director Shariff A. Shariff said the current ZIPA law, enacted in 2018, and the archipelago’s “obsolete” investment policy from 2005 would be changed to legalize the residence of the new categories of investors and their families.

Mr. Sharrif said the recently introduced “strategic investor” category had produced the intended results. Strategic investors must have a minimum investment capital of $ 100 million in areas such as high-end buildings and tourist hotels.

Extensive wish list

The expected new tax and residency breaks for homebuyers include no income tax on worldwide income and assets; Residence permit for villa buyers and their partners and up to four children under 20 years of age; First-time buyer pays only 50 percent of the normal capital gain when selling the share, 5 percent instead of 10 percent; foreign ownership allowed.

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Others include property registration through ZIPA; no VAT on the rental or sale of units; Income tax is only halved on local income – 15 percent instead of 30 percent (only applies to foreigners); profit repatriation after taxes is permitted; Residence permits are only valid for the duration of the purchaser’s ownership and are renewable every two years at $ 3,050 for the primary investor and $ 550 for each dependent investor.

Also, no work permit is issued, but can be applied for separately by the employer and there is no minimum length of stay required in order to claim benefits.