15 Jul Intellectual Property Rights as Specified Assets
On the 23rd of March the Finance Act, 2017 was gazetted. This Act makes provision for the revenue and public funds of Zimbabwe by amending Zimbabwe’s various taxation/revenue collection and fiscal laws. This short note discusses the amendments made to the Capital Gains Tax Act [Chapter 23:01] and the Census and Statistics Act [Chapter 10:29]. It will explore how these amendments, which have received little or no attention in the media, will affect Intellectual Property rights as well as Access to Information and Data Privacy in Zimbabwe.
The Capital Gains Tax concerns itself with the raising of a tax on capital gains; capital gains usually arise from the sale or transfer of an asset. The definition of specified assets in section 2 of the Capital Gains Tax Act confined itself to immovable property and any marketable security, which refers to shares, stocks, and debentures, or any bond that can be sold in a market share or exchange. The Finance Act, 2017 has now expanded the definition of specified assets to include intellectual property rights by inserting the following clause to section 2 of the Capital Gains Tax Act:
“(c) any right or title to property whether tangible or intangible that is registered or required to be registered in terms of-
(i) the Mines and Minerals Act [Chapter 21 :05]; or
(ii) the Patents Act [Chapter 26:03]; or
(iii) the Trade Marks Act [Chapter 26:04] ; or
(iv) the Industrial Designs Act [Chapter 26:02] ; or
(v) the Copyright and Neighbouring Rights [Chapter 26:05]; or
(vi) the Brands Act [Chapter 19:05]; or
(vii) the Geographical Indications Act [Chapter 26:06] ; or
(viii) the Integrated Circuit Layout-Designs Act [Chapter 26:07]
Act (No. 18 of 2001).”
This amendment makes it easier for businesses to list intellectual property rights such business owns as intangible assets in the organisation’s balance sheet. The same goes for individual innovators who regularly sell their innovations in the open market; evaluations of such innovations can no longer be confined just to the labour costs of building say, an Application, or Software program. The recognition of intellectual property rights as intangible assets is definitely a welcome development, and serves as a small acknowledgment by government of the role that technology and intellectual property rights continue to play in the global economy. Earlier this week, Tesla Motors was valued at $54 billion making it the most valuable automobile company in North America in terms of share price. One reason why such a comparably small company can be more valuable than bigger companies such as Ford, and General Motors is the fact that Tesla’s value partly lies in the estimated 285 patents the company holds. This in my view is an example of how intellectual property rights can propel a business to profitability.
Unfortunately, since intellectual property rights are now specific assets, the transmission or sale of such rights will accrue capital gains tax. The capital gains tax rates are set out in the Finance Act, currently this Act does not make provision for the rates applicable to intellectual property rights, and this will most likely be addressed in an upcoming amendment. Could this expansion of the revenue base have been the real motive behind government’s move to expand the definition of specified assets to include intellectual property rights? The motives behind this move will become clearer with time.
Access to Information
The second amendment of relevance to this note relates to access to information held by the Zimbabwe National Statistics Agency. In the past, this Agency acting through its Director-General could only release information with the written consent of the Minister responsible for administering the Census and Statistics Act. The amendment effected by the Finance Act, 2017 now permits the Director-General to release anonymised data to any data user who needs such data for the purposes of statistics based research. The amendment defines a data user as any agency or organ of the State as well as any non-State entities engaged in research for example, research institutions and educational institutions. Anonymised data refers to data from which information that could be used to identify individual persons has been removed.
While this amendment will ease access to information for research bodies, a lot still needs to be done in helping individual citizens’ access information that is held by public bodies, State agencies, and organs. Current access to information provisions as contained in the Access to Information and Protection of Privacy Act are insufficient as reflected by Zimbabwe’s poor score on the Global Right to Information Rating. The Global Right to Information Rating is an index used to show the quality of access to information laws from various countries around the world.