BY TATIRA ZWINOIRA RESERVE Bank of Zimbabwe (RBZ) governor John Mangudya has threatened to freeze the bank accounts of businesses which are taking advantage of the lower forex auction rate to make exchange gains through either importing or retailing.
Speaking at the Zimbabwe National Chamber of Commerce (ZNCC) 6th Annual Business Review Conference last week on Thursday, Mangudya said businesses were inflating supplier receipts or using higher exchange rates to make exchange gains.
“We are used to arbitrage opportunities, its arbitrage. It is the spirit of arbitrage and that is what is happening a lot in Zimbabwe so we are using moral suasion. We have our FIU (Financial Intelligence Unit), CID (Criminal Investigation Department), the police. You see, these things are so difficult to police. You need to have introspection, self-discipline, because it’s not there if you can imagine . . . You need to self-police yourselves,” he said.
“The FIU comes and closes your accounts, freezes them, when you are doing third party transactions…When we get hold of you we just close your accounts then you come to my office because the best way to make a person come to my office and tell me what he was doing is to freeze it. If you hit the pocket he won’t be able to transact . . .
“They now have associate companies in South Africa so they issue invoices from South Africa, come to Zimbabwe — transfer pricing, we are watching you. So they come to the auction for US$10 000 but the product is US$4 000. The other US$6 000 is what is transfer pricing…that mentality does not help the country.”
Currently, the official forex rate stands at US$1:$81,76 against a parallel rate ranging between US$1:$110 to $120.
Companies then go to the official forex auction and buy the US dollar more cheaply to either make US dollar gains through inflating prices from suppliers or to retail goods at a forex rate ranging between $91 and $110.
This is why in the 2021 National Budget, VAT registered operators’ systems were ordered to be interfaced with the Zimbabwe Revenue Authority server with effect from December 1, 2020 to capture US dollar sales.
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Failure to do so will result in operators being denied a tax clearance certificate.
“The instruments are there. We have got plenty of statutory instruments in Zimbabwe but compliance is our weakest point in Zimbabwe,” Mangudya said.
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