HomeNewsZimra backs down on bank forex tax

Zimra backs down on bank forex tax

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Zimbabwe Revenue Authority (Zimra) commissioner-general Geshem Pasi has backed down on plans to tax nostro accounts after sanity returned to the banking sector following the appointment of John Mangudya as new Reserve Bank of Zimbabwe (RBZ) governor.

BY TARISAI MANDIZHA

Nostro accounts are bank accounts held by domestic financial institutions in a foreign country to facilitate settlement of foreign exchange and trade transactions.

“With the new RBZ governor John Mangudya, we have sat down. The reason why government wanted to tax nostro accounts was that there was no discipline.

But with the new governor the banking sector is no longer allowed to keep above the minimum balance, so we don’t need to pursue the move to tax nostro accounts,” Pasi said.

“We hope the banking sector will continue being disciplined and the government will not have any reason to tax nostro accounts.”

Foreign banks operating in Zimbabwe are believed to be sitting on over $500 million of local depositors’ money kept in the United Kingdom and South Africa among other countries.

Last year, Zimra engaged the RBZ and the Ministry of Finance with the aim of taxing nostro accounts.

Zimra’s collections account for more than 95% of government revenue mainly from both direct and indirect taxes. Over the past few years, Zimra has witnessed an increase in the number of defaulters.

Zimra revenue target for 2015 was $3, 951 billion, of which $3,76 billion was supposed to come from taxes.

In 2014, Zimra missed its revenue target by 6% as it raised $3,6 billion against a target of $3,82 billion.

Pasi said the 2015 net collections to date amounted to $468,53 million against a target of $542,08 million, which translate to a negative variance of 14%.

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