ZiG firms slightly as government announces measures to promote its use

Zimbabwe’s currency, the Zimbabwe Gold (ZiG), firmed slightly from 13.7852 yesterday to 13.7821 after the government announced a raft of measures aimed at promoting the use of the local currency.

The ZiG was introduced on 5 April and has traded at between 13.2 and 13.7 to the United States dollar. Though the currency is stable it is largely unavailable.

Finance Minister Mthuli Ncube announced a number of measures aimed at promoting the use of the local currency. Though he did not give the current status, the local currency currently accounts for less than one-fifth of local transactions.

One of the measures to promote use of the local currency is through corporate tax. Companies will be required to pay half of their taxes in local currency. Though this measure was expected to apply from June, this could not be implemented because the necessary legislation had not been promulgated. Companies therefore settled their taxes in line with the proportion in which income was earned.

This is, however, being amended to compel companies to pay half their taxes in local currency. However, where a company’s revenue exceeds 50% in local currency, tax shall be payable proportionately in the currency of trade thereof. The next quarterly tax payment date is September. 

All presumptive tax will also be paid in local currency regardless of currency of trade.

Duty for selected goods such as cheese, some juices, clothing and leather will also be payable on local currency from next week, 1 August.

User fees for government services shall also exclusively be payable in local currency unless, specifically provided otherwise.

Central bank governor John Mushayavanhu said he was happy if transactions in local currency could rise to 30% by the end of this year, then to 40 % next year and 50% by 2026.

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