Zimbabwe govt rejects request to pay duty in forex

This comes as Treasury authorities want to ensure the country moves towards broader use of the local currency.

Responding to a letter of request by Shallom Fiscal Consultant managing director, Elisha Tshuma, Finance ministry permanent secretary, George Guvamatanga said Treasury could not accede to the application.

"Treasury notes that the bulk of the importers that you represent are traders who wish to settle their duty obligations in foreign currency and also claim input tax in the same currency.

"As you may be aware, Statutory Instrument 185 of 2020 offers options for transactions in multicurrency and also that the government plays a pivotal role to ensure that the country moves towards broader use of our own currency, hence encourages economic agencies to embrace the same."

Guvamatanga added that it was only in exceptional circumstances where the government wishes to achieve set objectives as in the case of designated goods and individual travellers that payment of customs duty in foreign currency is embraced.

"Furthermore, as tax consultants, you will also be aware that claiming of input tax in foreign currency poses administrative challenges on both business and the Revenue Authority, as enormous documentary evidence has to be traced," he added.

Commercial importers have been complaining that if they pay VAT in local currency at the border, they cannot claim VAT in foreign currency when they resale their goods in foreign currency.

"They can only claim the input tax in local currency and by the time they will get the refunds, the local currency would have lost its value.

"The government is now collecting all the output tax. Traders wanted to be given an option to pay their import obligations in the currency of their choice," Tshuma added.

The government re-introduced the local currency in 2018, rolling out a new currency in 2019 which was set at par with the bond notes and coins to ease a biting cash crunch at the time.

Since then, fiscal authorities have been actively pursuing a de-dollarisation policy and promoting the broader use of the local currency.

In a Statutory Instrument 225A of 2018, the government gazetted a list of goods that were dutiable in foreign currency.

The same list, which contains processed foods, furniture and other goods produced locally, is still being used.

THE government has rejected a request by commercial importers to pay duty and import Value Added Tax (VAT) on imported goods in foreign currency.