Harare, Zimbabwe – In recent months, Zimbabwe’s economy has shown signs of relative stability, following the Reserve Bank Governor’s presentation of the Monetary Policy statement on April 5, 2024, and the successful transition from the Zimbabwe Dollar to the Zimbabwe Gold (ZiG).
This transition has been met with positive responses from economic agents and the general public, fostering a more stable economic environment.
In a statement, Minister of Finance, Economic Development, and Investment Promotion, Professor Mthuli Ncube, highlighted the positive impact of the ZiG on the economy.
“The government is pleased by the acceptance of the ZiG by economic agents and the general public,” Ncube stated. “This more stable environment is critical for maintaining our positive economic trajectory.”
To further anchor the currency, exchange rate, and price stability, the Treasury is stepping up efforts to complement the existing Fiscal and Monetary Policy Framework. “We are currently working on a comprehensive review of the Framework of Tax Payments,” Ncube said. “This review aims to ensure a seamless transition from the exclusive payment of taxes in the currency of trade to local currency.”
Ncube explained that the Treasury also aims to re-align legislative requirements, particularly where the currency of trade is specified in Principal Legislation. This includes setting the current ratios of transactions in local and foreign currency and minimizing economic shocks associated with abrupt policy changes.
Regarding Corporate Income Tax, Ncube advised that payments should be guided by the provisions of Section 4A of the Finance Act (Cap. 23:04), which stipulates tax payment in proportion to the currency of trade. “For example, if a company exclusively transacts in local currency, tax shall be paid in local currency (ZiG),” he said. “Similarly, if transactions are in a 60:40 ratio of local to foreign currency, Corporate Income Tax should be accounted for in the same ratio.”
However, for the 2024 second quarter Corporate Income Tax obligations, Treasury authority has been granted for corporates to account for these obligations in both local and foreign currency on a 50:50 basis. For companies that have already paid tax for the second quarter according to current legal provisions, the Commissioner General of the Zimbabwe Revenue Authority (Zimra) has been authorized to manage such transactions administratively, as guided by the law.
Ncube also noted that businesses and the general public have the option to pay government fees and charges in local currency unless specified otherwise. Customs duty on imported goods is payable in local currency, except for designated foreign currency non-essential or luxury products.
As part of the comprehensive review of the Framework of Tax Payments, the Treasury will specify which taxes will be exclusively payable in local currency. This will be accompanied by the necessary supportive legislation, subject to approval by Parliament.
The recent economic measures and the introduction of the ZiG represent significant steps towards stabilizing Zimbabwe’s economy. As the government continues to refine and implement these policies, the focus remains on fostering a stable and sustainable economic environment for all Zimbabweans.
