Zimbabwe says companies should pay taxes in local currency, those that seek money from black market will be sanctioned

In another move to shore up its local currency, Zimbabwe says companies should pay half of the foreign currency portion of their tax obligations in Zimbabwe dollars but warned that those that will source money from the black market will be sanctioned by the Reserve Bank of Zimbabwe’s Financial Intelligence Unit. 

Those required to pay their taxes in the local currency will not be allowed to pay in any other currency including the United States dollars.

The taxes are due by tomorrow and any late payments will attract penalties.

In a statement yesterday the Ministry of Finance said those with inadequate Zimbabwe dollars should approach the central bank through their own banks.

The ministry said it will continue with the currency reforms that have enabled the economy to be competitive and will fine tune the foreign currency market in order to achieve lasting price stability.

The local currency has fallen sharply over the past two months but some economists say it will stabilise once companies start paying their quarterly taxes.

Zimbabwe has been under pressure from some quarters to abandon its local currency and adopt the United States dollar. 

Business, though calling for the liberalisation of the exchange rate, says this would be suicidal.

United States economist, Steve Hanke says Zimbabwe should dollarise like it did from 2009-2013, adding: “Zimbabwe’s Pres. Mnangagwa is giving a masterclass in economic stupidity and corruption. With annual inflation at a whopping 1298%/yr, he continues to try to push Zimbabweans to use the Zim dollar. He is leading Zim to ruins.”

Local economist Eddie Cross, a former member of the central bank’s monetary policy committee, however, says Zimbabwe should use the local dollar as the sole means of exchange on the domestic market for all transactions including taxes and levies.

The Zimbabwe government accuses the West of destabilising its currency as part of its regime change policy ahead of the elections set for 23 August.

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