Finance and Economic Development Minister, Professor Mthuli Ncube, has said the government has moved to scrap foreign currency duty payment on vehicle imports alongside other measures to enhance the wider use of the Zimbabwean Dollar.
In a statement Friday, Ncube said the measures were being introduced following a stop-gap measure to arrest inflation and promote the local currency.
He said to date, there has been consistency on the monetary front through due diligence exercised by the Reserve Bank of Zimbabwe which has seen coordination between fiscal and monetary authorities. Ncube said:
All duties and taxes on the importation of designated motor vehicles are now payable in Zimbabwe dollars again up to a limit of 50% of duties and taxes payable and all domestic taxes due from exporters on their export receipts are now payable in both foreign and local currency in direct proportion to the approved export retention.
All mining royalties are now payable in Zimbabwe Dollars up to a limit of 50% of royalties due.
Government, through various agencies, is presently seized with instituting various measures to enhance the formal use of the domestic currency. These measures are aimed at stemming illegal trade in foreign currency and its associated twin, that of parallel market benchmarking or indexation of prices of goods and services at parallel market exchange rates.
Under the new measures, if an exporter receives foreign currency, for instance, US$1 000 at a 40% surrender ratio (60% retention), he or she will be obliged 40% of the tax in Zimbabwean and 60% in foreign currency.
He said the latest developments are prompted by the rapid growth of privately-held foreign currency reserves from levels of around US$300 million in 2018, to over US$2 billion currently in Zimbabwean banks.
He added that official reserves have also increased from less than US$100 million to over US$1.2 billion currently, which includes the US$960 million equivalent in SDRs recently availed by the IMF to Zimbabwe.