Treasury working on review of Framework of Tax Payments

19 Jun, 2024 - 15:06 0 Views
Treasury working on review of Framework of Tax Payments Professor Mthuli Ncube

Judith Phiri, Business Reporter

THE Minister of Finance, Economic Development and Investment Promotion, Professor Mthuli Ncube has said treasury is currently working on a comprehensive review of the Framework of Tax Payments to ensure a seamless transition from exclusive payment of taxes in the currency of trade to local currency.

Currently, the legislative provisions states that companies must pay half of their tax obligations in ZiG and the remainder in U.S. dollars.

In a statement, the Minister said as part of the comprehensive review of the Framework of Tax Payments, treasury will, in due course, specify the taxes which will exclusively be payable in local currency.

“The more stable economic environment ushered in by the new Zimbabwe Gold (ZiG) currency has had a positive impact on the economy. Government is pleased by the acceptance of the same by economic agents and the general public.

“Against this background, coupled with the need to maintain this positive economic trajectory, treasury is stepping up to complement the Fiscal and Monetary Policy Framework aimed at further anchoring the currency, exchange rate and price stability,” he said.

“I therefore wish to advise that treasury is currently working on a comprehensive review of the Framework of Tax Payments to ensure a seamless transition from exclusive payment of taxes in the currency of trade to local currency; re-align the legislative requirements, in particular, where the currency of trade is specified in Principal Legislation; set the current ratios of transactions in local and foreign currency, and minimise economic shocks associated with abrupt policy changes.”

Prof Ncube said they will, in due course, specify the taxes which will exclusively be payable in local currency, and the necessary supportive legislation, with the requisite approval by Parliament.

The Minister said cognisant of the above, he wishes to advise that payment of Corporate Income Tax should be guided by the provisions of Section 4A of the Finance Act [Cap. 23:04], which provides for payment of tax in the equivalent proportion of the currency of trade.

He said for example, if a company exclusively transacts in local currency, tax shall accordingly be paid in local currency (ZIG).

“Similarly, where a corporate transacts in the ratio of 60 percent:40 percent, that is, local and foreign currency, respectively, Corporate Income Tax should, accordingly, be accounted in the same ratio,” he added.

“However, notwithstanding the current legislative provisions. Treasury authority is hereby granted for corporates to account for the 2024 Second Quarter Corporate Income Tax obligations in both local and foreign currency on a 50:50 basis.”

The Minister said corporates that have already paid tax for the second quarter, in accordance to the current legal provisions are advised that the Commissioner General of the Zimbabwe Revenue Authority (Zimra) is hereby authorised to manage such transactions on an administrative basis as guided by the law.

He advised that business and the general public have the option to pay Govemment fees and charges in local currency, unless where specified to the contrary.

Prof Ncube added: “Additionally, customs duty on imported goods is payable in local currency, except for designated foreign currency dutiable non-essential or luxury products. As part of the comprehensive review of the Framework of Tax Payments, Treasury will, in due course, specify the taxes which will exclusively be payable in local currency, and the necessary supportive legislation, with the requisite approval by Parliament.”

The Minister said the Zimbabwean economy has demonstrated relative stability in recent months following the presentation of the Monetary Policy Statement by the Reserve Bank Governor on 5 April 2024 and the successful transition from the Zimbabwe Dollar to ZiG.

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