Mthuli enacts proportionate payments for tax

TENDAIISHE NYAMUKUNDA

The Minister of Finance, Economic Development and Investment Promotion, Professor Mthuli Ncube (pictured), has announced  that  corporate income tax payments for the second quarter of the year shall be made in proportion to the currency of trade, Business Times can report.

According to Professor Ncube, companies that transact exclusively in local currency, the Zimbabwe Gold (ZiG), will have to pay their taxes  in that currency. However, companies using the hard currency  for transactions  will need to pay their taxes in that currency as well.

In order to facilitate a smooth transition from the exclusive payment of taxes in the currency of trade to local currency, Professor Ncube further disclosed that the Treasury is presently doing a thorough review of the Framework of Tax Payments.

The review, Professor Ncube said  “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”.

“I wish to advise that payments of Corporate Income Tax should be guided by the provision of Section 4A of the Financial Act [Cap 23:04], which provides for the 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),” Professor Ncube said.

He added: “However, notwithstanding the current legislative provisions, Treasury authority is hereby granted for corporate to account for the 2024 Second Quarter Corporation Income Tax obligation in both local and foreign currency on a 50:50 basis,

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 is hereby authorised to manage such transactions on an administrative basis as guided by the law.

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

Unless otherwise, companies  and the general public , according to Professor Ncube, have the choice to pay government fees and charges in local currency.

Furthermore, local currency must be used to pay custom duty on imported goods, with the exception of some luxury or non-essential foreign currency dutiable items.

He stated that in due course, the Treasury would explain which taxes are only going to be paid in local currency and what supporting legislation is required, along with the necessary permission from Parliament.