Why Zimbabwe requires businesses to display prices in Zim and US dollars

HON. MISIHAIRABWI-MUSHONGA: My question is directed to the Minister of Finance. There was an issuance of a Statutory Instrument a week or two weeks ago which compelled retailers to charge in foreign currency or put the cost of goods or price in foreign currency. My question however is, if that is the case, why are we still having those retail shops having an exchange rate because what should generally happen is if I am buying in foreign currency, I should just be issued my receipt in foreign currency. So, there should not necessarily be any exchange rate and I am surprised because I would have thought that the Ministry of Finance would be wanting to get taxes or VAT in foreign currency. So why are we still having shops displaying an exchange rate when we should just be paying in foreign currency and be given your receipt in foreign currency and the Government receiving that foreign currency so that they actually have foreign currency as part of their tax that they are receiving. Perhaps he could explain that policy.

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): I thank the Hon. Member for the question. Basically, we are trying to achieve several things. The first one is to make sure that agents adhere to the auction rate. We have said that we must also remit taxes in the currency of trade and that is why we want to continue to enforce the display of the exchange rate because we have noticed that some will display it correctly at $81.3 or whatever it is and some will use some other exchange rate of $100 and above, surely that is wrong. We are doing other things as well.

Those who are accessing money from the auction, we are compelling them to sign an undertaking that having access to money from the auction, they will sell their goods in terms of display of the exchange rate which we are compelling them to display. So we just want to make sure that there is compliance. The Central Bank (RBZ) has issued six hotline numbers which any citizen can call in order to make sure that we know who is violating the law. You can also inform the police so that they can act. We want to make sure that we enforce the law as stipulated and everyone complies. I thank you.

HON. MISIHAIRABWI-MUSHONGA: I think the Minister is not getting me at all. When you are now paying in USD and they are pricing their goods in USD; you merely give them your $10 and pay your goods at $5, you are given your $5 change and you pay VAT in USD for the $5 that you are paying. So, I do not understand why we still have an exchange rate because at the point that we had said you can pay in your currency of choice, they should just receive the money that I am giving them. If I pay in RTGs, I get my receipt in RTGs and I pay my VAT in RTGs. If I pay in USD – I still cannot understand why they are having an exchange rate because we are now paying in USD and I would have thought that the Minister would have been quite excited about wanting to get whatever money that is being paid in VAT in hard currency to be registered as hard currency. So, I am still not getting that explanation Madam Speaker.

HON. PROF. M. NCUBE: Thank you very much, I think I am clearer now. The question is very clear.  When the customer pays in the currency of their choice and the retailer accepts, they ought to remit the tax that applies to that transaction in the currency of trade. So, if the customer has paid in US dollars, the retailer must remit the tax in US dollars as well.  If they are not, as the Hon Member is saying, they are breaking the law and we will enforce the law and catch them.  I will instruct ZIMRA to go around doing the relevant inspections to make sure that those who are breaking the law are brought to book.  We must enforce that, otherwise we are losing revenue because they are playing around with the exchange rate when they are keeping the forex, depriving us of foreign currency.  We will make sure that we deal with them.  I thank you.

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