The new regulations allowing half the duty on car imports to be paid in Zimbabwe dollars have now been formally gazetted in Statutory Instrument 72A of 2022 by Finance and Economic Development Minister Professor Mthuli Ncube.
The Customs and Excise (Designation of foreign currency dutiable goods), (Amendment), Notice, 2022, fixes the prevailing weekly average foreign currency exchange rate at the auctions as the exchange rate to be used.
Before the switch, all duty had to be paid in foreign currency as a vehicle was bought in foreign currency outside the country prior to import. The payment of duty for car imports partly in local currency was part of measures adopted by Government in February to promote the use of the Zimbabwe dollar for transactions.
In the measures announced by Prof Ncube in February mining firms were given the green light to pay half their royalties in Zimbabwe dollars.
Previously, mining entities settled the full amount, a percentage of the gross of their total exports, in foreign currency since virtually all minerals are export products. All domestic taxes due from exporters on their export receipts are now payable in both foreign and local currency in proportion to what they have to sell to the Reserve Bank for Zimbabwe dollars and what they can retain in foreign currency.
As an example, an exporter who received foreign currency of US$1 000 at 40 percent surrender ratio (60 percent retention) will pay taxes on the 40 percent in Zimbabwe dollars and the 60 percent in foreign currency.
Government reintroduced the use of the Zimbabwe dollar to restore domestic and export competitiveness, stabilise the current account, which has also been boosted by remittances, growth in exports and import substitution.