New regulations issued on forex use: Here’s how they affect your business

currency Zimbabwe
With currency weakening, Zim pins hope on IMF SDRs (REUTERS/Philimon Bulawayo)

Charging above the official exchange rate and refusing to take Zimbabwe dollars will attract fines under new regulations gazetted by Government.

There will also be penalties for companies that misuse the forex they get from the Reserve Bank of Zimbabwe’s currency auction. Banks, too, may also be fined if the clients they represent at the auctions falsify information.

Government has, since the reintroduction of the Zimbabwe dollar in 2019, issued a series of regulations in an attempt to shore up the Zimbabwe dollar and stabilise the exchange rate, in the face of low forex supply and weak public sentiment on the local currency.

Here, newZWire details some of the key regulations under Statutory Instrument 127, and how they affect your business.

Fines for auction money

Under auction rules, companies applying for forex have to say what they want to use the money for. According to the new regulations, these companies or individuals will be fined for using the money for a different purpose.

The fine is a fixed penalty of Z$1 million or an amount equivalent to the value of the foreign currency taken from the auction, whichever amount is higher.

Charging only in forex

You can be fined for charging for goods and services only in forex and refusing to take payment in Zimbabwe dollars at the official exchange rate. If you do so, you can be fined Z$50,000 or an amount equivalent to the value of the foreign currency charged, or whichever amount is higher.  

Banks can be fined over their clients

Companies or individuals participating on the auction apply through their banks for the money. According to the regulations, a bank can be fined if their client uses false information in applying for forex. According to the regulations, a bank is supposed to verify any information in the application. There must be no “information that the authorised dealer knows or ought to have known to be false in any material respect”.

There’s a fine of Z$5 million.  

You can be fined for pricing above official exchange rate

You will be fined if you sell goods at an exchange rate above the official exchange rate. It is illegal to put a “premium” on your Zimdollar prices in order to encourage people to pay in US dollars. It is also illegal to give customers a discount for paying in US dollars.

There’s a fixed penalty of Z$50,000 or an amount equivalent to the value of the foreign currency charged for the goods or services in question, whichever is the higher amount.

There’s a fine for issuing a Zimdollar receipt for goods paid for in forex

If someone pays for goods or services in forex, and you give them a receipt in Zimdollars, or record that the sale was in Zimdollars, you will pay a Z$50,000 fine, or an amount equivalent to the value of the forex charged for the goods or services in question (whichever is the greater amount).

You have a chance to appeal

For all these offences, the offender has 48 hours in which to lodge an appeal, by showing that the fine was a mistake. After that, if not reversed, the fine kicks in.

The 90-day penalty

For every day that the penalty is not paid, the offender can be fined 5% of the outstanding fixed penalty for a period of 90 days.

According to the rules, no such penalty will be issued more than 24 months from the date when the default or alleged default occurred.

What if you don’t pay up in the 90 days?

There’s a heavier fine, or possible jail time.

According to the regulations: “Upon the expiry of the ninety-day period within which any civil penalty order of any category must be paid or complied with, the defaulter shall be guilty of an offence and liable to a fine not exceeding level six or to imprisonment for a period not exceeding one year or to both (in the case of a corporate defaulter, every one of its officers is liable to the penalty of imprisonment, and to the fine if the corporate defaulter fails to pay it).”

newZWire