Zanzibar has rolled out a new tax and residency programme for expatriates to live and invest in the Tanzanian island.
This move follows huge infrastructural and tourism-friendly initiatives that have enabled Zanzibar to withstand adverse effects of the COVID-19 pandemic.
Until now, Zanzibar had incentives for real estate developers and not property buyers.
Zanzibar has not attracted significant real estate buyers
The result has been that Zanzibar has been unable to attract any significant foreign investors into the real estate sector, unlike Mauritius, Dubai, Oman and Singapore, which have successfully attracted both developers and buyers.
With the introduction of this new tax and residency plan, real estate developers can a residency permit-, allowing them to live in Zanzibar as non-Citizens.
There are also several residency benefits for foreign buyers, such as first-time buyers paying only 50% of regular capital gains on the sale of it, at 5% and not the standard rate of 10%.
Foreign ownership is permitted with Zanzibar Investment Promotion Authority (ZIPA) doing the registration.
There is no VAT charged on any unit rental or sales held by foreigners, and that income tax is at 15% instead of 30% for foreign buyers.
Foreigners are allowed to hold residence permits for the period the buyer owns the property that is renewable after 24 months at the cost of US$ 3,050 for the investor and $ 550 for each dependant.
Foreigners who get into such ventures as restaurants, bars, watersports or retail operations will be given the same incentives as those in the real estate sector.
Foreigners in the real estate business will not be required to have a business license for the first three months, will be allowed to own the property and that there will be no corporate tax for the first five years.
Expatriates will be allowed to repatriate any profits from the property after tax with a 100% exemption on withholding tax on interest paid into foreign bank accounts.
In July this year, Terminal 3 at Amani Karume International Airport (AAKIA) will be opened to improve service quality and customer care for visitors to the island.