Zimbabwe plans to overhaul tax system to boost ZiG currency

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Zimbabwe plans to introduce regulations that will require businesses to settle a portion of their taxes in ZiG to boost the new bullion-backed currency that’s had a “positive impact” on the economy, the finance minister said.

The “Treasury is stepping up to complement the fiscal and monetary policy framework aimed at further anchoring the currency, exchange rate and price stability,” Mthuli Ncube said in an emailed statement on Wednesday.

A policy has been in place since 2020 that allowed taxes to be settled in the currency businesses mostly traded in. The new system will specify what ratio of taxes will need to be paid in ZiG and foreign currency, and those that can only be settled in the new unit.

The changes will add to a raft of measures aimed at ensuring the ZiG, which is short for Zimbabwe Gold, doesn’t suffer the fate of its six predecessors. Introduced on April 5, the unit replaced the Zimbabwean dollar, which had lost 80% of its value against the US dollar on the official market this year before it was abandoned.

The ZiG is backed by 2.5 tons of gold and $100 million in foreign currency reserves held by the central bank.