Businesses to pay tax in forex
Pride Mahlangu, Business Reporter
THE Zimbabwe Revenue Authority (Zimra) has ordered businesses trading in both Zimbabwe dollar and foreign currency to pay their taxes in foreign currency.
In June last year, the Government outlawed the use of the multi-currency system through Statutory Instrument (SI) 142 of 2019, which the country adopted in February 2009 at the height of hyperinflation.
Last September, the Government buttressed the aforementioned law by promulgating SI 212/2019 to stop unscrupulous businesses from quoting, charging and accepting payments in United States dollars or any kind of foreign currency.
In a public notice, Zimra said it had come to its attention that some businesses were still transacting in both local and foreign currency, which enjoined the tax authority to make such businesses remit their tax obligations in forex.
“It has come to the attention of the Commissioner-General of Zimra that some businesses are trading in both RTGS$ and foreign currencies.
“Following this observation, Zimra has found it necessary to clarify that in accordance with Section 4A of the Finance Act (Chapter 23:04) and Section 38 of the Value Added Tax Chapter 23:12) these businesses should remit taxes in foreign currency.”
The taxes to be paid in foreign currency, it said, include Pay-As-You-Earn, Value Added Tax, Capital Gains Tax and mining royalties.
Zimra added that all employers who were paying remunerations in foreign currency should also remit the employees’ tax in foreign currency.
It explained that if part of the remuneration was being paid partly in foreign currency and local currency, the employers shall apportion the employee’s tax accordingly and remit both the forex and ZW$ to the Commissioner in time.
“Registered operators are required to remit Value Added Tax in foreign currency to the Commissioner if the price for the taxable supplies in question is tendered in forex.
“A company, trust, pension fund or other juristic person whose taxable income from trade and investment is earned, received or accrued in whole or in part in a foreign currency shall pay tax in the currency that income is earned, received or accrued,” it said.
“All specified assets sold in foreign currency shall pay capital gains tax in forex. With effect from 1st January 2020 all specified assets purported to have been disposed of in Zimbabwean dollars shall be deemed to have been sold in US$ at the market value, unless the seller provides documentary proof that the asset in question has been sold in Zimbabwean dollar.”
Zimra said with effect from 22nd of February 2019, persons specified in Section 37A of the Finance Act were required to pay mining royalties in forex to the extent that the amounts from which the mining royalties withheld are in foreign currency amounts.
It is hoped that the move by Zimra will go a long way increasing the country’s much-needed foreign currency revenue base to meet the importation of essentials such as medicine, electricity, fuel and grain, among others.
During the belated International Customs Day celebrations held in Bulawayo on Monday, guest of honour Zimra board member Dr Morris Mpofu said with the support from its stakeholders and clients, his organisation was billed to “immensely” contribute to the Government’s target of making Zimbabwe an upper-middle-income economy by 2030. — @pridesinstinctz