Zimra audits firms for forex tax compliance

Nyanga, (New Ziana) – The Zimbabwe Revenue Authority (Zimra) is auditing companies for foreign currency tax compliance amid revelations the state was being prejudiced of millions in potential revenue due to none receipting and under declaration of hard currency denominated transactions to avoid paying tax.

Government in June allowed businesses to use a dual pricing system – the Zimbabwe dollar and United States dollar – for their goods and services.

At the same time, businesses were also required to pay tax in both currencies for earnings that would have been recorded in either currency.

But to maximise earnings, the tax collector had noted most businesses were not recording foreign currency denominated transactions, to avoid paying tax.

Zimra Commissioner General, Faith Mazani said those found flouting the law will be sanctioned.

“Tax audits focused on monitoring of tax payments in foreign currency are currently ongoing,” she said at the Institute of Chartered Secretaries and Administrators Annual Conference.

“Any detected non-compliance will be sanctioned through the following as provided in the law, charging of penalties and interest, prosecution, naming and shaming non-compliant sectors.”

Investigations, Mazani said, had shown that some of the mal-practises to avoid paying foreign currency denominated tax included understating of sales, writing of transactions in foreign currency in manual registers, and issuing local currency receipts for payments made in foreign currency.

They also extended to failure to bank foreign currency tendered and in some cases use of stand-alone tills, which are not configured to the ZIMRA fiscalisation system.

Mazani appealed to the chartered secretaries and administrators to aid Zimra in its bid to stamp out non-compliance and corruption.

To address some of the ills, Finance and Economic Development Minister, Mthuli Ncube in the 2021 national budget directed that all business ICT systems be interfaced with the ZIMRA server with effect from 1 December 2020, failure of which no operator will be issued with a Tax Clearance Certificate.

Non-compliant operators will also be excluded from participating in the weekly foreign currency auctions.

Zimra was directed to conduct awareness campaigns to educate the public to demand receipts showing the correct currency of trade and report activities that contravene tax laws.

With Zimbabwe not getting much budgetary support from outside the country, government is reliant on Zimra to fund its activities.
New Ziana