Zimbabwe Government Gazette dated 2010-10-01 number 64

Published by Authority

Vol. LXXXVIII, No. 64 1st OCTOBER,2010 Price US$2,00

General Notice 274 of 2010. Scope ofthis ruling
REVENUE AUTHORITYACT [CHAPTER 23:11] 4, This ruling will only apply to movable and immovable assets,
trading stock and assessed losses. The ruling shall not apply to
Provisional General Ruling Conversion of Closing Balances for outstanding Zimbabwe dollar monetary balances such as, bank
Tax Purposes balances, creditors, debtors, and otherliabilities as at 31st December,
~ 2008, which should reflect actual values agreed by the parties to
NOTICEis hereby given,in terms ofsection 34D of the Revenue the transaction.
Authority Act [Chapter 23:11] as read with paragraph 10 to the Taxable income accrued in foreign currency
Fourth Schedule of the same Act, that the Commissioner-General
of the Zimbabwe Revenue Authority has issued the following 5. (1) Whereit is proved that the taxpayer’s incomefor the period
binding general ruling:—
prior to 1st January, 2009, was received or accrued in foreign
currency and the financial statements were prepared in foreign
Purpose of ruling currency, the Commissioner-General will subject to subsections (2)
1. The purpose of this general ruling is to provide guidelines on and (3) accept reasonable closing balances in foreign currency as
how the Commissioner-General shall exercise his discretion in opening balances for the 2009 tax year in terms of subsection (4) to
approving rates of exchange applied in converting the 2008 closing section 4A of the Finance Act [Chapter 23:04}.
balances that were expressed in Zimbabwean dollars to US dollars, (2) In the case wherethe financial statements were prepared
for taxation purposes. in denominations other than the United States dollars the
Background Commissioner-Generalwill acceptthe use ofinternational cross rate
ofexchange as at 31st December, 2008, or such otherrate as will give
2. (1) The transition from the Zimbabweandollarcurrencyto the substantially similar results.
multi-currency system has presented challenges to both the Tax
Authority and Taxpayers, including that of determining value of (3) In the case wherethe financial statements were prepared
balances of items that have an impact on the 2009 accounts and in Zimbabweandollars, the Commissioner-General will accept the
Incometax returns in US dollars. use of the samerate as was used to convert the foreign currency
transaction or balances into Zimbabwean dollars or such otherrate
(2) The Finance Act, 2009,(No. 5 of2009) gave the taxpayers as will give substantially similar results.
latitude to work-outthe rates ofexchangeapplicableto their varying
circumstances. Taxable income accrued in Zimbabwe dollars

(3) The Act gave the Commissioner-Generalthe authority to 6. The Commissioner-General will approve rates of exchange
manage the processandthe tax consequencesby approvingtherates whoseneteffect will achieve the following—
of exchange put forward by taxpayers. (a) Assets acquired or constructed in foreign currency:
(4) The Actalso requires the Commissioner-Generalto issue Balances equalto the costin foreigncurrencyless notional
a general binding ruling on the manner in which heorshe shall wearand tear claimable to 31st December, 2008.
exercise this discretion. (b) ae acquired or constructed in Zimbabweandollars
Relevant law
Balances in foreign currency that is approximately
3. (1) Section 34D of the Revenue Authority Act [Chapter 23:11] equivalentto the replacement value less notional wear and
as read with the Fourth Schedule to the Revenue Authority Act tear claimable to 31st December, 2008.
gives the Commissioner-General of the Zimbabwe Revenue
Authority (ZIMRA) powers to make advance tax rulings on any {c) Trading stock acquired in foreign currency and
provision of that Act, whether on his own initiative or on application recorded in Zimbabweandollars Z$s:
by any person interested in a transaction that is or may be liable to Where trading stock was initially acquired in foreign
tax. currency but recorded in Zimbabwean dollars the
Commissioner-General will accept the use of the same rate
(2) Section 4A ofthe Finance Act [Chapter23:04] effective as was used to convert the foreign currency transaction or
from the Ist January, 2009, obliges every individual, partnership, balances into Zimbabweandollarsor suchotherrate aswill
company, trust, pension fund or otherjuristic person to express any give substantially similar results;
final balanceforthe financial year ending 31st December, 2008, in
(d) Trading stock acquired in Zimbabweandollars Z$s:
“United States dollars at such rate of exchange as the Commissioner
may approve”, Where trading stock was acquired and recorded in
Zimbabweandollars the Commissioner-Generalwill accept
(3) The samesection provides that; “. . the Commissioner- the use of an exchangerate that results in a value in foreign
General shall . . . issue a binding general ruling on the mannerin currency approximately equivalent to the replacement
which he or she shall exercise his or her discretion.” value.