The Zimbabwe Revenue Authority (Zimra) and the Reserve Bank of Zimbabwe (RBZ) yesterday warned businesses transacting in foreign currency but not remitting taxes in forex that they face heavy censure if caught.
The two institutions issued a joint appeal for voluntary compliance with tax laws.
This comes amid indications that some businesses were charging foreign currency for goods and services but were recording the sales in local dollars.
Zimbabwe, which for over a year had officially been using a mono-currency for trading, in June this year allowed businesses to dually price their goods and services in local currency and in foreign currency, primarily the United States dollar.
Since then, RBZ Governor Dr John Mangudya said there has been a 50-50 usage of the local currency and the greenback in the number of businesses transactions recorded.
There are cases were some proprietors were declining local dollars.
But oddly, this has not been the same in terms of tax compliance with some businesses cheating Government but either total failure to declare transactions conducted in foreign currency or under-declaring for tax purposes.
Businesses are required to split their tax payments in both local currency and foreign currency depending on which currency was used for transacting.
Zimra Commissioner General Faith Mazanhi said it had been established that businesses had devised schemes to conceal transactions conducted in foreign currency to avoid paying tax using the same.
“Where a sale is recorded in Zimbabwean dollars, the invoices, till slips and receipts recording the sale must be issued in Zimbabwean dollars,” she said while addressing a joint Zimra and RBZ virtual press conference..
“Where a sale is made in foreign currency, the invoices, till slips and receipts recording the sale must be issued in foreign currency,” she added.
“Where a sale is made in parts of Zimbabwean dollars and foreign currency, the invoices, till slips and receipts must reflect such currency details.”
The tax authority established that to avoid paying tax in foreign currency, some businesses were allegedly not recording transactions being tendered for in foreign currency while where transactions had been recorded, part of the foreign currency was not being declared for tax purposes.
Some were reportedly writing transactions done in foreign currency manually instead of recording them electronically to avoid being traced while others were receiving foreign currency from their customers but issuing them Zimbabwe dollar receipts.
On the other hand the hard cash being received in payments was not being banked.
“There are stand alone tills which are not configured to the Zimra fiscalisation system and some traders have created back offices and banking halls where foreign currency payments are being received but not being receipted or declared on returns,” Ms Mazanhi said, adding all such practices were a direct violation of the law.
“Tax audits on payments in foreign currency are currently on-going and any detected non-compliance will be sanctioned as provided in the law,” she said.
“The sanctions include penalty charges and interest, prosecution, naming and shaming non-compliant sectors or businesses.”
Ms Mazanhi encouraged the public to report businesses practising such behaviour through a whistle-blower facility the tax authority runs while Dr Mangudya said the central bank was also establishing a toll free line for the public to report such crimes.
Dr Mangudya said while deposits in local foreign currency accounts were going up, this was not the same in terms of tax payments to Zimra.
“We have seen an increase in domestic foreign currency accounts deposits but we are not seeing the same increase in the revenue being collected by Zimra. We also know that some of the businesses are not even banking the cash that they are getting,” he said.
Dr Mangudya even went Biblical in exhorting businesses to pay their dues.
“Even Jesus said you must give Caesar what belongs to Caesar,” he said, adding that paying tax aided national development as the government would get more funding for its programmes. — NewZiana/Finance & Business.