Zimra wins landmark forex tax dispute

In a significant ruling, the Supreme Court has declared that taxpayers cannot avoid paying taxes in foreign currency when their income or sales are in foreign currency. This landmark decision arose from a legal dispute between the Zimbabwe Revenue Authority (Zimra) and Delta Corporation, where Delta contested Zimra's authority to collect Value-Added Tax (VAT) and income tax on foreign currency earnings.

For years, Delta and other taxpayers have challenged Zimra's imposition of VAT and income tax on foreign currency earnings, arguing that it contradicted national tax laws. However, the Supreme Court, through a unanimous decision by Deputy Chief Justice Elizabeth Gwaunza, Justice Tendai Uchena, and Justice Samuel Kudya, upheld a previous High Court ruling that dismissed Delta's appeal. The court affirmed Zimra's right to impose penalties and interest on Delta for not paying taxes in foreign currency as required.

Zimra welcomed the ruling, emphasizing its importance in confirming the authority to collect taxes in foreign currency when income or sales are in foreign currency. The decision renders ongoing cases challenging tax assessments based on the "gross tax" concept moot, underscoring the clarity brought by the Supreme Court's interpretation of tax laws.

This ruling sets a precedent for tax compliance in Zimbabwe, clarifying that taxpayers must adhere to paying taxes in the currency corresponding to their earnings, as stipulated by law.