Zimbabwean businesses accepting payment in foreign currency but paying taxes only in Zimbabwe dollars risk heavy fines, the Zimbabwe Revenue Authority (Zimra) says.
Zimra and the Reserve Bank of Zimbabwe on Thursday issued a joint appeal for voluntary compliance with tax laws.
Zimbabwe, which for over a year had officially been using a mono-currency for trading, in June this year allowed businesses to dually price their goods and services in local currency and in foreign currency, primarily the United States dollar.
Since then, RBZ Governor John Mangudya said, there has been a 50-50 usage of the local currency and the greenback in the number of transactions recorded.
But this has not been the same in terms of tax compliance with some businesses cheating Government but either total failure to declare transactions conducted in foreign currency or under-declaring for tax purposes.
Businesses are required to split their tax payments in both local currency and foreign currency depending on which currency was used for transacting.
Zimra Commissioner-General Faith Mazanhi said businesses had devised schemes to conceal transactions conducted in foreign currency to avoid paying tax using the same.
“Where a sale is recorded in Zimbabwean dollars, the invoices, till slips and receipts recording the sale must be issued in Zimbabwean dollars,” she said at a joint Zimra and RBZ virtual press conference.
“Where a sale is made in foreign currency, the invoices, till slips and receipts recording the sale must be issued in foreign currency,” she added.
“Where a sale is made in parts of Zimbabwean dollars and foreign currency, the invoices, till slips and receipts must reflect such currency details.”
To avoid paying tax in foreign currency, Mazanhi said, some businesses were allegedly not recording transactions being tendered for in foreign currency. Where transactions had been recorded, only part of the foreign currency was not being declared for tax purposes.
Some were reportedly writing transactions done in foreign currency manually instead of recording them electronically to avoid being traced while others were receiving foreign currency from their customers but issuing them Zimbabwe dollar receipts.
“There are standalone tills which are not configured to the Zimra fiscalisation system and some traders have created back offices and banking halls where foreign currency payments are being received but not being receipted or declared on returns,” Mazanhi said, adding all such practices were a direct violation of the law.
“The sanctions include penalty charges and interest, prosecution, naming and shaming non-compliant sectors or businesses.”
Deposits, but no tax
Mangudya said while deposits in local foreign currency accounts were going up, this was not the same in terms of tax payments to Zimra.
“We have seen an increase in domestic foreign currency accounts deposits but we are not seeing the same increase in the revenue being collected by Zimra. We also know that some of the businesses are not even banking the cash that they are getting,” he said.
Mangudya even went Biblical in exhorting businesses to pay their dues.
“Even Jesus said you must give Caesar what belongs to Caesar,” he said.