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Companies to pay double tax in forex . . . Defaulters face jail terms and fines

22 Mar, 2019 - 00:03 0 Views
Companies to pay double tax in forex . . . Defaulters face jail terms and fines

eBusiness Weekly

Africa Moyo in KARIBA
Companies trading in foreign currency that fail to remit Value Added Tax in foreign currency face stiff penalties that include double payment of arrears in hard currency, the Zimbabwe Revenue Authority (Zimra) has said.

Further, firms that fail to comply with the notice of assessment within the first seven days of a period of 181 days, would be liable to a civil penalty of US$30 for every day they remain in default.

A defaulting company is not allowed to go beyond 181 days otherwise it risks, on conviction, a fine not exceeding level 10 or to imprisonment for a period not exceeding six months or to both such fine and such imprisonment.

This emerged on Wednesday during the
two-day Employers’ Confederation of Zimbabwe (Emcoz) 2019 human resources indaba in
Kariba.

Zimra domestic tax official Blessing Sithole  said it was unwise for businesses required to pay VAT in forex to dodge their obligations.

“Where a registered operator fails to remit VAT in foreign currency, a notice of assessment shall be raised; and will be liable to a penalty of double the amount of tax payable; and the penalty shall be paid in foreign currency,” said Sithole.

“A registered operator who fails, without just cause, to comply with the notice of assessment within the first seven days of the period of 181 days shall; be liable for a civil penalty of thirty United States dollars for each day the registered operator remains in default, not exceeding a period of one hundred and 81 days.

“Thereafter he shall be liable on conviction to a fine not exceeding level 10 or to imprisonment for a period not exceeding six months or to both such fine and such imprisonment.”

The remarks follow the resumption by Zimra to collect VAT in foreign currency after several companies started selling goods and services in forex from October last year when the central bank directed banks to separate RTGS accounts and Nostro FCA Accounts.

The move was seen as a tacit admission by the central bank that that 1:1 rate between bond notes and/ or RTGS was not at par with the United States dollar.

The move saw a number of companies, especially pharmacies charging in forex. Those in the property sector are also selling land in foreign currency only.

This resulted in Zimra publishing Public Notice No. 22 of 2018 of 18 November 2018, requiring taxpayers to account for VAT in foreign currency (where VAT was collected in foreign currency).

Zimra acting head of corporate communications Inzwirashe Muwonwa, recently told our sister paper, The Sunday Mail that they had collected a total of US$18 481 400 to date.

Muwonwa said; “Indeed, the traders are required to pay VAT in forex. We have held several meetings or seminars with the traders to remind them of the tax obligation.

“After the announcement of the Monetary Policy Statement and the promulgation of the Finance Act Number 1 of 2019, we are preparing the guidelines and public notices for our taxpayers.

“In addition, we carry out on a regular basis tax compliance enforcement measures, including tax audits.”

Following the announcement of RTGS dollars, taxpayers charging in that currency also pay VAT in RTGS$.

However, some firms have been caught offside for attempting to pay their obligations in local unit while collecting revenue in foreign currency.

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