Minister of Finance and Economic Development Mthuli Ncube has announced that the payment of Corporate Income Tax for the second quarter of 2024 should be made in proportion to the currency of trade.
According to a statement issued on Wednesday afternoon, companies that transact entirely in local currency will be required to pay their taxes in the same currency, denominated as Zimbabwe Gold (ZIG), while those dealing in foreign currency will pay their taxes accordingly.
Ncube revealed that the Treasury is 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.
According to Minister Ncube, the review aims 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 minimize economic shocks associated with abrupt policy changes.”
Regarding Corporate Income Tax, Minister Ncube stated that payment 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.
“…I wish 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.
“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%:40%, that is, local and foreign currency, respectively, Corporate Income Tax should, accordingly, be accounted in the same ratio,” Ncube said.
However, the Minister noted that Treasury authority is 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.
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The Minister also announced that businesses and the general public have the option to pay Government fees and charges in local currency, unless specified to the contrary.
Additionally, customs duty on imported goods is payable in local currency, except for designated foreign currency dutiable non-essential or luxury products.
The Minister stated that the Treasury will specify the taxes which will exclusively be payable in local currency, and the necessary supportive legislation, with the requisite approval by Parliament, in due course.
In his words, “This comprehensive review of the Framework of Tax Payments will ensure a seamless transition and minimise economic shocks associated with abrupt policy changes.”
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