By Alois Vinga
MOST companies are still reluctant to present full disclosure of their foreign currency sales revenue in a development widely perceived by market watchers as a loophole likely to be abused to avoid US dollar tax revenue collections.
At the height of the Covid-19 pandemic two years ago, the Reserve Bank of Zimbabwe (RBZ) moved to promulgate Statutory Instrument 85 of 2020 which allowed the transacting public to use their foreign currency to buy and sale goods, marking a climb down from a strictly Zimbabwe dollar economy.
The development enabled companies to tap into the regulatory measure as a source of foreign currency generation.
However, a recent analysis by NewZimbabwe.com Business shows that while there is no legal requirement to declare US dollar sales, on moral standing basis, a number of listed companies are still reluctant to divulge details of their foreign currency sales just as a show of reciprocity to initiatives implemented by monetary authorities.
Market watchers believe that continued silence on such declarations will shortchange citizens who are likely to benefit from such US dollar tax payments as well as make it difficult to ascertain the impact of the relevant regulatory directive on companies and the economy.
Confederation of Zimbabwe Industries (CZI) president, Kurai Matsheza insisted that they are operating above the law.
“The reporting currency in Zimbabwe currently is the Zimbabwe dollar. It is therefore the legal requirement for companies to report their performance in the local currency. However, for tax purposes and for the 20% that goes to the revenue authority, the companies that do sell in US dollars declare the foreign currency sales for them to pay the taxes,” he said.
Quizzed on whether business is not taking advantage of such non-reportage to fleece tax authorities, the industry leader expressed doubts of such possibilities.
“I don’t think it’s possible. Besides, violating the laws of the country is punishable and as a business we don’t condone such behaviour,” added Matsheza.
Economist Doctor Prosper Chitambara however said it is ideal for companies to be reporting in the US dollar currency earnings as well in order to reflect the realistic picture on the ground.
“The main reason however behind this reluctance could be prompted by the need to maximise profits against a background where there are little incentives on offer for such declarations.
“While some companies are doing the right thing by mentioning their US dollars earnings, it is morally prudent for those not doing so to do the right thing by declaring their foreign currency earnings as this will go a long way to assist smooth collection of foreign currency tax revenues,” he said.
Contacted for comment over the matter, Zimbabwe Stock Exchange (ZSE) chief executive, Justin Bgoni said only the Public Auditors and Accountants Board has authority to push for such changes.
“When reporting, the issuers are mandated to comply with the International Financial Reporting Standards (IFRS), and International Standards on Review Engagements (ISREs), as prescribed by the Public Accountants and Auditors Board (PAAB).
“The guidelines set in the IFRS, ISREs and PAAB cater for the transparency required of the Issuers when reporting.
“The PAAB however has the mandate to set financial reporting standards in Zimbabwe, to which the ZSE issuers adhere to,” he added.
Recently, the Zimbabwe Revenue Authority (ZIMRA) launched investigations on several companies who are avoiding US$ sales amid reports that some are issuing Zimbabwe dollar receipts even after customers have paid in foreign currency.