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Nqobile Bhebhe, [email protected]

IN a bid to further promote the use of the local currency, the Government has directed that for the June 2023 Quarterly Payment Date (QPD), taxpayers should settle 50 percent of the foreign currency portion of their corporate tax obligations in Zimbabwean dollars.

Any payments in USD or any other foreign currency for the portion of corporate income tax due in local currency for the June QPD will not be accepted.

In a statement outlining new measures yesterday, the Ministry of Finance and Economic Development said Government has noted that following the implementation of various policy measures to stabilise the economy, there has been notable stability in the movement of the exchange rate and general prices of goods and services in the economy.

To that end Government is committed to continuing the currency reforms that have enabled the economy to be competitive and will continue to fine tune the foreign currency markets in order to achieve lasting price stability.

“In this regard and to further promote the use of the Zimbabwe dollar in the economy, Government will, for the June 2023 Quarterly Payment Date (QPD), require taxpayers to settle 50 percent of the foreign currency portion of their corporate tax obligations in local currency,” reads part of the statement.

However, the ministry said where the law requires the tax liability to be paid in local currency, taxpayers are compelled to settle such tax obligations exclusively in local currency.

“Government will, therefore, not accept any payments in USD or any other foreign currency for the portion of corporate income tax due in local currency for the June QPD.

“Taxpayers without adequate Zimbabwe dollars to meet the local currency tax obligation should urgently approach the Reserve Bank of Zimbabwe through their banks to facilitate disposal of their USD holdings in order to access the requisite Zimbabwe dollars.”

The ministry warned corporates bent on engaging in the parallel market that they will face sanctions from the Financial Intelligence Unit.

“Corporates are strongly discouraged from engaging in parallel market transactions for settlement of taxes as they will face sanctions from the Financial Intelligence Unit.

“The usual statutory penalties for late payment of taxes due shall be vigorously applied,” said the ministry.

The Reserve Bank of Zimbabwe (RBZ) has said it will stay the course of a tight monetary policy stance to restore and maintain macro-economic stability.

Reserve Bank of Zimbabwe (RBZ)

This comes as the central bank has been rolling out policy pronouncements, which include liberalisation of the foreign currency to arrest exchange rate volatility and price increases.

The bank attributes the exchange rate volatility to behavioural factors at a time inflation has also been increasing and alternative value preservation instruments remain limited.

According to the central bank, the full implementation of recent stabilisation measures will go a long way in restoring demand and confidence in the local currency, stabilise the exchange rate, and inflation.

The weekly auction was changed and now offers just US$5 million a week with bid limits set at a minimum of US$1 500 and a maximum of US$50 000.

A new wholesale auction system, where banks bid on behalf of their clients, was introduced and has the interbank maximum trading limits of between US$100 000 to US$500 000.

Since these measures were introduced, the local unit has depreciated from trading at $1 404,80 to the greenback to Tuesday’s $6 926.