Latest News Editor's Choice

News / National

Mthuli Ncube authorises 50-50 currency split for tax payment

by Staff reporter
20 Jun 2024 at 02:22hrs | Views
The Zimbabwean Treasury has authorized companies to pay their Second Quarter Corporate Income Tax obligations in both local currency (ZiG) and foreign currency on a 50:50 basis. This decision is part of a broader effort to review the tax payment framework amidst the economy's relative stability following the introduction of ZiG.

Quarterly payment dates (QPDs) for corporate taxes are on March 25, June 25, September 25, and December 20 each year. The Reserve Bank of Zimbabwe (RBZ) reports that approximately US$300 million in corporate income tax is collected quarterly, now translating to a demand for ZiG equivalent to US$150 million (approximately ZiG2 billion). Currently, about ZiG1 billion (worth US$80 million) circulates in the market post-currency conversion.

The anticipated higher demand for ZiG due to these tax obligations is expected to strengthen the local currency. Finance Minister Professor Mthuli Ncube highlighted the positive impact of the stable economic environment brought about by the RBZ's April Monetary Policy Statement and the successful transition to ZiG.

ZiG, backed by gold and foreign currency reserves, is increasingly accepted by industry players. The Treasury aims to support the Fiscal and Monetary Policy Framework to maintain currency, exchange rate, and price stability. The review will also facilitate a transition to local currency tax payments and align legislative requirements.

Minister Ncube clarified that Corporate Income Tax payments should reflect the currency proportions used in transactions. For instance, companies transacting exclusively in local currency should pay taxes in ZiG, while those with mixed currency transactions should account for taxes accordingly.

Businesses and the public can pay government fees in local currency unless specified otherwise. Customs duties are payable in local currency, except for certain luxury items. The Treasury plans to specify which taxes will be exclusively payable in local currency, pending legislative approval.

Source - The Chronicle