Zimbabwe Revenue Authority says companies selling goods in forex should pay tax in forex

The Zimbabwe Revenue Authority (ZIMRA) yesterday said that companies still charging for goods and services and paying their employees in foreign currency should also remit taxes in similar currency.

Government banned the use of multi-currencies, dominated by the US dollar, in the second half of last year, and reinstated the Zimbabwe dollar as the sole legal tender.

The multi-currency regime had been in use for a decade, after it replaced the Zimbabwe dollar which had been driven to worthlessness by hyper-inflation in 2009.

But, despite the re-introduction of the local currency, some businesses and service providers continue to charge in US dollars.

This has prompted the tax collector to demand its dues such as Pay As You Earn, Value Added Tax (VAT), Income Tax, Capital Gains Tax (CGT) and mining royalties from those businesses in foreign currency.

“It has come to the attention of the commissioner general of the Zimbabwe Revenue Authority 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 (Chp,23:04) and section 38 of the Value Added Tax Act (Chp, 23:12) these businesses should remit taxes in foreign currencies,” said ZIMRA.

“All employers who are paying remuneration in foreign currency should remit the employee’s tax in foreign currency. If part of the remuneration is paid partly in foreign currency and partly in RTGS$, the employers shall apportion the employee’s tax accordingly and remit both the foreign currency and RTGS$ to the commissioner on or before the due date.”

ZIMRA said registered operators were also required to remit VAT in foreign currency if the price for the taxable supplies in question was tendered in foreign currency.

On income tax, the tax collector said a company, trust, pension fund or other juristic person whose taxable income from trade and investments is earned, received or accrued in whole or in part in a foreign currency shall pay tax in the currency that income is earned.

ZIMRA said the same applied to CGT.

“All specific assets sold in foreign currency shall pay CGT in foreign currency. N.B 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 Zimbabweans dollars,” it said.

“With effect from 22 February 2019, the persons specified in section 37A (of the Finance Act) shall pay mining royalties in foreign currency to the extent that the amounts from which the mining royalties are withheld are foreign currency amounts.” –New Ziana

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