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New law for forex transactions

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BY TATIRA ZWINOIRA

THE Zimbabwe Revenue Authority (Zimra) says a new law will shortly be introduced to force all companies transacting in foreign currency to pay taxes in forex, even for sales made in local currency.

Speaking yesterday during a virtual conference on tax, Zimra top executive Misheck Gova said the new law would be backdated to the beginning of this month.

“We have come up with a new law which- you know – is going to be effective with the new statutory instrument which is going to be promulgated at any time and it will start with effect from August,” Gova said.

“If you are not going to do a proper declaration in relation to your income as an operator, whether it be VAT or income tax, according to the Income Tax or Finance Act section 4, we are going to deem everything to be forex and, you are going to pay in forex and I think that is going to be very vital.”

Gova added: “We are simply saying, do the correct declaration on the amounts which you have received and have been tendered, but if you don’t do what is correct, then everything will be looked at as though you have tendered in forex.

“That is the new law that will be coming. So, it is a self-audit exercise which you need to make sure you have done and done correctly.”

The move by Zimra comes at a time the government is attempting to shore up its revenue base as international financial institutions have refused to assist the country with a bailout package until substantive reforms are implemented.

“Statutory Instrument (SI) 185 of 2020 was aligned with the provision of section 4 (a) of the Finance Act, which requires that tax be paid in the currency of transaction. In line with SI 185 of 2020, Zimra issued Public Notice Number 40 of 2020 addressing certain business malpractices.

“I would like to articulate some of them and these include some businesses that are not recording some transactions being tendered for in foreign currency,” Zimra commissioner-general Faith Mazani (pictured) said.

Reserve Bank of Zimbabwe governor John Mangudya announced at the same meeting that they were currently working on introducing point of sale machines to businesses where nostro bank cards could be used to make it easier for tax purposes.

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