By STAFF WRITER
The Zimbabwe Revenue Authority will carry out impromptu audits of corporate activities with a view of quantifying potential tax liabilities arising out of illegal foreign currency trading.
This follows a recent resurgence of malpractices, contributing to price instability in the economy imposing significant downside risks to macro-economic stability, and the erosion of domestic and international competitiveness.
In an advisory note on Thursday, Minister of Finance Mthuli Ncube said Government is presently seized with instituting various measures to curb illegal trade in foreign currency and its associated twin evil; that of parallel market benchmarking or indexation of prices of goods and services at parallel market exchange rates.
“ZIMRA will also be carrying out compliance Audits with respect to compliance with the Location Tax introduced during the 2021 fiscal year,” Ncube said.
“The FIU will continue to closely monitor and analyse financial transactions to identify, expose and take action against perpetrators of money laundering and other financial crime. The capacity of the FIU and other law enforcement agencies to investigate and prosecute violations of the Bank Use Promotion Act as well as various AMLCFT laws will be enhanced.”
Regulatory bodies including the Public Accountants and Auditors Board, will be working on a framework to impose appropriate financial and professional sanctions on members of the accounting, auditing and other professions who may be complicit in superintending over illicit affairs by corporate entities which they are charged with running, Ncube said.
Ncube said Government had improved access to foreign currency by all bona fide businesses and individuals through the auction system.
Businesses and individuals are currently facing challenges with the auction system because of delays in the disbursement of allotted forex, which has forced some to turn back to the black market.
“However, a residual core foreign currency demand, fuelled mainly by speculative, and store of value demand for currency on one hand as well as criminal and money laundering activities on the other, has perpetuated and sustained the parallel market for foreign currency,” Mthuli said.
“The result has been that despite large and small corporates, SMEs and individuals having access to the RBZ auction system, the existence of the parallel market has provided an opportunity for price benchmarking at parallel market rates notwithstanding the fact that some of the businesses are accessing their full requirements for foreign exchange via the official channels. These practices were the intended targets of S1127.”
The central bank, working closely with the FIU have begun a process of identifying and prosecuting perpetrators of parallel market activities.
“Business who disregard the law and continue price their goods on the parallel market rates will have their licenses suspended,” Mthuli said.
“Members of the public are also strongly encouraged to report to the FIU and the National Economic Conduct Inspectorate, all business entities directly or indirectly benchmarking prices at parallel market exchange rates.”
