THE Zimbabwe Revenue Authority (Zimra) and the Reserve Bank
of Zimbabwe (RBZ) have declared war on business entities accepting foreign
currency for goods and services, but illegally receipting these transactions in
local currency, saying the culprits will be named, shamed and prosecuted.
Under the law, all businesses and individuals have to pay
taxes in the currency of their sales in proportion to each currency used.
A number of such businesses selling at least some goods and
services in foreign currency, mostly US dollar, are receipting those sales in
Zimbabwean dollars, which allows them to pay the resulting tax share in local
currency, and thus potentially face charges of tax fraud.
The Government recently authorised the pricing of goods and
services in both local and foreign currency but using the ruling auction rate
for conversions.
It has been the law for some time that taxes have to be
paid in the currency of the revenue.
A business that receives 13 percent of its revenue in
foreign currency and 87 percent in local currency would pay 13 percent of its
company taxes in foreign currency and 87 percent in Zimdollars.
More critically, this rule applies to all taxes, meaning that
Value Added Tax in particular has to be accounted for separately for each
currency used in sales.
The only way of satisfying tax inspectors is having
receipts that indicate the currency of the transaction so that the business
will pay the appropriate taxes in the same currency.
Zimra and the RBZ yesterday addressed a joint virtual press
conference where they warned against foreign currency tax fraud.
Zimra Commissioner–General Faith Mazanhi appealed to the
public to report any receipting and tax-related malpractices by retailers and
other traders.
She said naming, shaming and prosecution will be applied to
those who deliberately cook up false receipts to avoid paying taxes in foreign
currency.
“I would want to encourage our business community to be
good corporate citizens for the betterment of our economy.
“Tax audits focused on monitoring of tax payments in
foreign currency are currently ongoing. Any detected non-compliance will be
sanctioned through the following as provided in the law: charging of penalties
and interest, prosecution and naming and shaming.
“Our valued clients are therefore encouraged to avoid
attracting the sanctions and do the honourable by correctly declaring all their
tax in full, on time, all the time,” said Mrs Mazanhi.
The Zimra boss urged people to use the authority’s
whistle-blower facility and report any malpractices.
She said customers must insist on being issued with a
correct receipt showing the currency of the transaction.
“Zimra further encourages members of the public to insist
on being issued invoices, tax invoices, and receipts for business transactions
done reflecting the correct currency of transaction.
“Where sellers issue discounts to their customers in either
local or foreign currency, they must issue credit and or debit notes to
correctly record the changes in currency of trade.
“You must report any act that contravenes the tax
provisions. Use our whistle blowing facility where the identity of the informer
is kept in strict confidentiality,” she said.
RBZ Governor Dr John Mangudya said the bank was also
fighting forex tax fraud. The RBZ now has a toll-free number to facilitate
reports of malpractices.
“To complement the whistleblowing facility, we have come up
with a toll-free number to facilitate reports of malpractices by business
entities with a view to ensure Zimra collects all taxes for economic growth.
“Some businesses are coming to the foreign currency auction
and buying US dollars at the rate of US$1: $82 but they go on to sell their
goods at the rate of US$1: $95.
“We will play our part as RBZ to ensure we walk the talk on
punishing such offenders,” he said.
An investigation by The Herald has found that a number of
registered shops in Harare’s city centre, the industrial area as well as high
density suburbs are accepting US dollars but issuing the receipts in Zimbabwean
dollar equivalent at a rate of their choice, which is frequently not the
auction rate.
Zimra also carried its own research and established that
some businesses are not recording transactions being settled in foreign
currency and where transactions have been recorded, part or all the foreign
currency tendered is not being declared for tax purposes.
Transactions in foreign currency are being written in
manual registers while foreign currency tendered is not being banked, the
investigation revealed.
Parallel manual invoicing is being used for recording
transactions involving foreign currency, and such invoices are not declared for
tax purposes. There are stand-alone tills, which are not configured to the
Zimra fiscalisation system as required by law.
Some traders have created back offices and banking halls
where forex payments are being received but not receipted nor declared on
returns. Herald
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