TAX MATTERS: Payment of income tax in forex … saga continues

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THE enactment of SI 33 and 142 in 2019 provoked a whirlwind of tax controversy in the arena of payment of income tax in foreign currency. This is notwithstanding existing laws providing for payment of income tax in foreign currency on foreign currency trading since 2009.
Where taxable income is earned, received or accrued in whole or in part in foreign currency, income tax is to be paid in the same or another specified foreign currency. Therefore, taxpayers are required to pay income tax in foreign currency where income is received, earned or accrued wholly or partly in foreign currency.

The Finance Act provides for the splitting of tax liability on the basis of respective taxable incomes when earnings are partly in foreign currency and Zimbabwe dollar. However the law is silent on the methodology of split, creating multiple basis of splitting the tax liability and opening doors for manipulation of the law by either the Zimbabwe Revenue Authority (Zimra) or taxpayers.