ZIMRA’s Recent Public Notice Pours Water On The Government Claim That Bonds/RTGS And USD Are Equal

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We all know the lie line that our government, led by the Fiscal Authorities ( Ministry of Finance) and Monetary Authorities, likes to feed us: The bond note, RTGS balances/Ecocash and the actual United States Dollars are one and the same thing. Well ZIMRA’s Public Notice 45 of 2018 seems to contradict all that.

What the public notice says

What the horse said

Zimbabwe Revenue Authority (ZIMRA) has noticed that there are businesses that are trading, withholding and collecting VAT, PAYE, Capital Gains Tax and other taxes in multi-currencies. Following this observation, ZIMRA has found it necessary to clarify that these businesses should remit taxes in the specific currencies in which they collect them without conversion to RTGS, bond notes, local point-of-sale and mobile money. Clients can remit their multi-currency taxes to ZIMRA through the following FCA Nostro (USD) accounts:

ZIMRA Goes on to list these accounts and the statement continues after that.

Clients wanting to remit in hard currencies other that the USD can enquire with the above listed banks for the appropriate FCA Nostro accounts.

It would appear some currencies are more equal than others

Early this year in the case of the State vs Kumbulani Davi the state failed to prove that a business receiving its payment in bond notes instead of real USD was a crime. After all if someone owes me money I should not really care whether I received the money in Rands, Pula, Pound, Euro or USD so long as we stick to the official exchange rates prevailing at the time.

The government itself has been insisting that the bond, RTGS/Ecocash and FCA nostro/USD are separate but equal. The public notice from ZIMRA just goes on to prove that just like this Apartheid mantra was a lie- this is another lie by the government. It would appear that some currencies are actually more equal than others and ZIMRA knows this.

Foreigners have also been asked by the government to pay in foreign currency when paying for fuel at pumps. One assumes discriminatory techniques are to be used to profile and sniff out “foreigners” here. The good Minister of Industry Raj Modi was called out for charging customers at his shops in real USD despite the government’s one as to one policy.

And yet here we are

In my opinion the government should just accept the facts. The power to make laws does not mean that you have the power to change facts. It’s like making a law that says the sun rises in the west and not the east. It will not change the facts- all it will do is make life difficult for all of us as we have to pretend in the public domain while in private we mock and sensibly disregard the law.

It is also unfair when the government makes laws which it breaks only when it suits them. They are sending the message that this law is only meant to be followed by us and not them. And they wonder why foreign investors are not responding en masse when they claim Zimbabwe is Open for business. They are trying to spin straw into gold and no one is buying.


  1. magas

    i think your observation here is a bit mistaken, ZIMRA is saying if you have charged your clients in USD, so remit your taxes in USD. Why would someone charge me usd and is not willing to pay his taxes in USD. since that person is saying the currencies are not equal, he should also do so when paying his taxes

    1. Farai

      If the currencies are equal then why even bother ask kuti ndakacharger my customers with what currencies?

      1. Garikai Dzoma

        Amen to that.

    2. Garikai Dzoma

      No I don’t think you understand this at all. Here ZIMRA is not talking about informal businesses illegally charging people in USD. It is talking about exporters who are actually exporting goods. They’re receiving USD payments in their bank accounts and are using their equivalent RTGS accounts to make tax payments. That is legal according to the RBZ, for ZIMRA to demand payment in Forex now that is not only duplicitous of the government but also a tacit admission that the one as to one assertion is false. Concerning the kind of transactions you are referring to where people charge in USD well demanding USD tax for those would be unenforceable especially given the corruption and incompetence prevalent at ZIMRA

      1. Tonderai

        Garikai, you and others are failing to understand the basic tenets of the tax administration system. Firstly, this applies to transaction taxes withheld at source, e.g. VAT, PAYE, Withholding Tax, etc. The principle (and law – e.g. VAT Act section 38) since the implementation of the multi-currency is that these taxes are paid in the currency of transaction e.g. If the seller invoices in Rand, then the corresponding taxes must be paid in Rand. The recent separation of bank account classification by RBZ then also applies that where the seller has transacted in Nostro, then the corresponding taxes shall be paid via Nostro. It’s that simple. Also note that this doesn’t apply to QPDs (company tax on profits).

        1. Garikai Dzoma

          Maybe I am missing something here but based on my accounting what you are suggesting does not really work. Basic principles state that VAT is paid on a set off basis and what you are suggesting is preposterous. VAT registered businesses deal with VAT in more than one currency. For example you buy goods with VAT included in Zim and Sell them both abroad and domestically. VAT payable, if any is based on the difference between VAT on purchases and VAT on sales. Your proposed system is unworkable in real business situations as it would have required businesses to create multiple VAT accounts and even then track each item including raw materials as they turn into products.

          1. Tonderai

            It’s not my “proposed system” but rather it is the legal taxation system that’s been in place since 2009. In the current setup, your Nostro account will tell a tale of your “forex” income. If it’s from local sources then you will need to pay the VAT through that same method. Like for like.

            Remember, ignorance of the law is no excuse.

        2. Jeftah

          Nostro is not a currency nor is RTGS or Bond. The argument does not make sense. Currency means whether or not its Rand, USD, Pula etc. So, if the denomination says USD, the fact that its Nostro or RTGS does not make a difference for the purposes of your section 38

        3. Anonymous

          Tonderai urikurasika big time

  2. simbarashe mukwekwezeke

    I think people are missing the point here, if you are invoicing in nostro only , where are you getting the Rtgs balance to settle your debts? its simple logic and we shouldn’t allow our anger to cloud our judgement while allowing business people a free ride.

    1. Garikai Dzoma

      Please see the comment above. VAT is a two way system you invoice and get invoiced multiple times and in various currencies sometimes. I remember we had a Euro client, a pound client etc. You only pay the difference. All these amounts were converted back to USD equivalent and we paid/received our VAT.

      1. Tonderai

        In that scenario, you were meant to do a VAT return per currency and pay/recover accordingly.
        Effectively, you took your exchange difference issues to ZIMRA which was not in line with the law.

        1. Garikai Dzoma

          The interesting thing Tonderai is that in that case it means the RBZ has to also pay back VAT in USD in cases where they owe the business in question. They have been busy dishing out RTGS to people without bothering to check whether businesses are transacting in FCA or RTGS. So they are also guitly of violating their own provisions.

          1. Tonderai

            Indeed Garikai. But up until early October when bank accounts were separated, there was no problem in that specific approach. It is now, when the separation is clear and evident that the issue must be revisited.

  3. Van Lee Chigwada

    Both Garikari and Farai do not know how Taxation in Zimbabwe works. End of story. Period.

  4. Van Lee Chigwada

    This is from Section 38 of the Tax Act:

    4)Notwithstanding section 41 of the Reserve Bank of Zimbabwe Act[Chapter 22:15]and the ExchangeControl Act[Chapter 22:05]where a registered operator—

    (a)receives payment of any amount of tax in foreign currency in respect of the supply of goods or services,that operator shall pay that amount to the Commissioner in foreign currency;
    (b)imports or is deemed in terms of section 12(1)to have imported goods intoZimbabwe, that operatorshall pay any tax thereon to the Commissioner in foreign currency.In this subsection “foreign currency” means the euro, British pound, United States dollar, South African rand,Botswana pula or any other currency denominated underthe Exchange Control(General)Order, 1996, publishedin Statutory Instrument 110 of 1996, or any other enactment that may be substituted for the same.

    So, this is a half-**** article with zero research.

    1. Garikai Dzoma

      Please don’t mock other people’s research in such offensive terms. You have cited this act (which I studied at length in school by the way) In this section foreign currency means “… United States Dollar or any other currency denominated under the Exchange Control Order or any other enactment that may be substituted for the same
      1. Duty shall be in foreign currency. The Act says duty shall be in foreign currency it doe not say in currency in which goods were sold!!! I hope in your speed to mock you did not miss that. I repeat the ACT does not empower the Commissioner to demand duty in the currency which you sold the goods.
      2 In any case a bank balance denominated in USD is as per other and this law taken to mean foreign currency
      3 RTGS balances are in USD. So paying your duty in forex is allowed and so is paying in RTGS.
      4 The Commissioner is not God as countless case law has proven over the years.

      1. Tonderai

        Mocking aside, let’s not mix issues of sale of goods and their purchase/importation.
        VAT is added to the price of goods/services being traded. That VAT component belongs to the Commissioner-General and not the seller. Netting off to establish a payable/refundable position is only done on the basis of “per currency”, not at the converted equivalent.

        Granted that for expediency and uniformity, ZIMRA converts all imports into their “USD – RTGS” equivalent, hence you don’t see import duties being mentioned on the actual notice.

  5. allen

    Bottom line is this is not going to work until we really bring closure to this usd bond being equivalent issue. What happends if i sell in usd and then i buy from my suppliers in bond , in what currency should i remit or claim on the net vat payable/ receivable amount?

    1. Tonderai

      You would pay the output VAT in Nostro USD and claim the input VAT in RTGS USD via 2 separate returns.

  6. Sagitarr

    If Zimra would like to benefit from USD, they must ask that RBZ ensures that depositors can withdraw USD at ATMs. As long as bond notes only come out of the banks, it is clear they are not at par with the USD hence the confusion and arbitrage. The FCA nostros may help but the confidence level of individuals and corporates in the entire banking system is much closer to zero. There seems to be more criminal than normal financial activity in Zimbabwe and this is very bad for any kind of investment.

  7. Anonymous

    Please don’t forget that all our monies were converted to US in 2009, i never exported anything, so never received any incentive (bond notes). Everything was perged in US, be it selling house etc. how can you change my bank balance to other value beside US, thats the headache.

  8. gb

    do we have foreign currency to talk of when we are using multi currency system. also there is no local currency so that we can talk of foreign. can someone clarify because according to rbz rtgs usd and fca usd are same value

  9. Anonymous

    Its not a contradiction on the Zimra part, remember the guys for example Pharmacies are making us buy medication in Forex and putting a strain on a society with nothing in order to get medication, it would be prudent for them to remit also in Forex because they are trying to make super normal profits @ the same time they want to remit a 3rd as per rates out there. No they should remit as they collect from the poor public.