Zimbabwe’s tax agency on Monday ordered businesses charging their customers in foreign currency to also settle their tax obligations in foreign currency, as the government aims to raise scarce dollars.
In June last year, authorities in the southern African nation re-introduced the Zimbabwe dollar, ending a decade of dollarisation, in a move that sent inflation soaring to three-digit figures.
President Emmerson Mnangagwa’s government made it illegal to charge customers in US dollars, but many businesses still do. Miners and some companies in the tourism sector were, however, allowed to pay workers in US dollars.
The Zimbabwe Revenue Authority said it had discovered that some businesses were charging in foreign currencies and should therefore “remit (the) taxes in foreign currencies”.
This includes value added tax, capital gains, pay-as-you-earn and income tax.
Without US dollar or gold reserves, the local currency has continued to weaken against the greenback, but Mnangagwa maintains that there is no going back to dollarisation. The opposition and some economists say Zimbabwe should abandon the local currency for the dollar to stabilise prices and encourage foreign investment. – Reuters