ZIG for Corporate Tax Payments

ZIG for Corporate Tax Payments

Nevanji Munyaradzi Chiondegwa

HARARE – In a significant move towards economic stability, the Zimbabwean government has announced that all second-quarter corporate income tax payments will be made in the new Zimbabwe Gold (ZiG) currency. This decision comes after the successful transition from the Zimbabwe Dollar to the Zimbabwe Gold in April 2023.

The Minister of Finance, Economic Development and Investment Promotion, Hon. Prof. Mthuli Ncube, stated that the new currency has been met with positive acceptance by economic agents and the general public, fostering a more stable economic environment.

“Against this background, coupled with the need to maintain this positive economic trajectory, Treasury is stepping up to enhance the Fiscal and Monetary Policy Framework aimed at further anchoring the currency, exchange rate and price stability,” Ncube said in a press release.

The government has implemented 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. This includes:

* Ensuring adherence to requirements in particular, where the currency of trade is specified in Principal Legislation
* Setting current ratios of transactions, in local and foreign currency, and
* Minimising economic shocks associated with abrupt policy changes.

The Minister also advised 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 currency of trade. However, companies operating in the export sector, particularly those exclusively transacting in local currency, shall accordingly be paid in local currency (ZiG).

Similarly, corporate income tax should, accordingly, be accounted for in the same currency. However, notwithstanding the current legislative provisions, Treasury authority is hereby granted for corporates where a corporate transacts in the ratio of 60% that is, local and foreign currency, corporates to account for the 2024 Second Quarter Corporate Income Tax obligations in both local and foreign currency on a 50:50 basis.

Corporations that have already paid tax for the 2nd 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.

The government is also encouraging businesses and the general public to opt for paying government fees and charges in local currency, unless where specified by the law. Additionally, customs duty on imported goods is payable in local currency, except for designated foreign currency durable non-essential or luxury products.

As part of the comprehensive review of the Framework of Tax Payments, Treasury will, in due course, specify the taxes which will exclusively be payable in local currency, and the necessary supportive legislation, with the requisite approval by Parliament.