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Zimbabwe to Allow Tax Payments in New ZiG Currency to Strengthen Local Economy. Zimbabwe’s Finance Minister, Professor Mthuli Ncube, has announced a groundbreaking policy change allowing companies and individuals to pay taxes in the newly introduced Zimbabwe Gold (ZiG) currency.
This move is part of a broader strategy to bolster the ZiG, which is backed by 2.5 tons of gold and $100 million in foreign currency reserves held by the Reserve Bank of Zimbabwe (RBZ).
The new policy will replace the previous system, in place since 2020, which permitted tax payments in the currency most commonly used in business transactions, typically the US dollar.
Under the new system, businesses will be required to pay a portion of their taxes in ZiG, with specific ratios to be determined. The new regulations will also define which taxes must be paid exclusively in ZiG.
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Zimbabwe to Allow Tax Payments in New ZiG Currency to Strengthen Local Economy: Context and Rationale
The ZiG, introduced on April 5, 2024, replaced the Zimbabwean dollar, which had depreciated significantly, losing 80% of its value against the US dollar on the official market before its abandonment.
The introduction of the ZiG aims to stabilize Zimbabwe’s economy and currency system by providing a more reliable monetary unit backed by tangible assets.
Professor Ncube’s reforms are designed to prevent the ZiG from suffering the same fate as its predecessors, including the bond note, the real-time gross settlement (RTGS) dollar, and the Zimbabwean dollar.
By requiring tax payments in ZiG, the government hopes to increase the currency’s usage and acceptance, thereby strengthening its position in the economy.
Expected Impact
The new policy is expected to enhance the stability of the ZiG and support the government’s broader fiscal and monetary policy framework. According to Minister Ncube, the measure will contribute to greater currency, exchange rate, and price stability.
“Treasury is stepping up to complement the fiscal and monetary policy framework aimed at further anchoring the currency, exchange rate, and price stability,” Ncube stated.
The move is also intended to boost confidence in the ZiG, encouraging its adoption and reducing reliance on foreign currencies. T
he policy aims to leverage the ZiG’s bullion backing to stabilize the local economy and provide a more stable currency option for Zimbabweans and businesses alike.
Conclusion
Zimbabwe’s decision to accept tax payments in ZiG marks a significant shift in its economic strategy, reflecting the government’s commitment to stabilizing and strengthening its currency.
By integrating the ZiG into the tax system, Zimbabwe seeks to enhance the currency’s credibility and encourage its use in everyday transactions.
The effectiveness of this policy will depend on its implementation and the ZiG’s ability to gain traction in both domestic and international markets.
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