Zimbabwe says businesses that charge US dollars should pay taxes in US dollars

The Zimbabwe Revenue Authority says businesses that charge clients in United States dollars should pay their taxes in that currency.

According to the Herald ZIMRA said: “Zimbabwe Revenue Authority has noticed that there are businesses that are trading, withholding and collecting Value Added Tax, Pay As You Earn, Capital Gains Tax and other taxes in multi-currencies.

“Following this observation, ZIMRA has found it necessary to clarify that these businesses should remit taxes in the specific currencies in which they collect them without any conversion to RTGS, bond notes, local point of sale and mobile money.”

A number of businesses especially pharmacies are charging drugs in United States dollars which are not easily available.

This has adversely affected people with chronic diseases like diabetes and high blood pressure especially those in rural areas.

Zimbabwe insists that the United States dollar and the bond note are at par and has secured backing for the bond note from Afreximbank but businesses are insisting on hard cash.

There has been an outcry especially in Parliament as pharmacies are reportedly obtaining foreign currency from the government but they refuse to sell their drugs in bond notes or electronic money.

To make matters worse the price of drugs in US dollars is too high. One legislator said pharmacies were importing a drug for 68 US cents but selling it for $12.

The bond note and electronic money have been losing value against the US dollar since the bond note was introduced in November 2016 but things got worse from at the beginning of last month when the central bank reintroduced foreign currency accounts.

While the move was aimed at stopping banks from abusing foreign currency earned by clients, most people took it to mean that the two were no longer at par.

The bond note plummeted but then gained ground and has sort of stabilised around 1 to 3.

ZIMRA is currently reporting directly to Treasury after it board was dissolved.

Finance Minister Mthuli Ncube is expected to announce his budget for 2019 this week and business will be watching whether this would be new government policy.

Zimbabwe cannot technically outlaw the selling of products in US dollars as it is using a multiple currency system and can only persuade traders to use currency readily available to the public which is electronic money.

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