The new regulations allowing half duty on car imports to be paid in Zimbabwean dollars have now been officially published in Statutory Instrument 72A of 2022 by the Minister of Finance and Economic Development, Prof. Mthuli Ncube.

The Customs and Excise (Description of Goods Subject to Foreign Exchange Duty) Notice, (Amendment), 2022, fixes the prevailing weekly average exchange rate at auction as the exchange rate to be used.

Prior to the change, all duties had to be paid in foreign currency as a vehicle was purchased in foreign currency outside the country prior to importation. Paying duty on car imports partly in local currency was among the measures adopted by the government in February to promote the use of the Zimbabwean dollar for transactions.

In the measures announced by Professor Ncube in February, mining companies were given the green light to pay half of their royalties in Zimbabwean dollars.

Previously, mining entities paid the full amount, a percentage of their total export crude, in foreign currencies since virtually all minerals are export commodities. All internal taxes payable by exporters on their export earnings are now payable in foreign currency and local currency in proportion to what they must sell to the Reserve Bank for Zimbabwean dollars and what they can keep in foreign currency.

For example, an exporter who received USD 1,000 of foreign currency at a 40% repurchase rate (60% retention) will pay tax on the 40% in Zimbabwean dollars and the 60% in foreign currency.

The government has reintroduced the use of the Zimbabwean dollar to restore domestic and export competitiveness, stabilize the current account, which has also been boosted by remittances, export growth and import substitution.

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