Businesses operating in Zimbabwe must strictly comply with long-standing legal requirements to settle tax obligations in the specific currency of transaction, Permanent Secretary in the Ministry of Finance George Guvamatanga has warned, dismissing corporate complaints over historical liabilities.

Speaking during a mid-term budget review breakfast meeting hosted by the Daily News, Guvamatanga underscored the fundamental statutory principle: “You pay your taxes in the currency of trade.”

The clarification comes as the majority of Zimbabwean companies report the bulk of their sales in US dollars, making foreign currency tax compliance a vital revenue stream for the state and a key point of regulatory oversight.

Guvamatanga pushed back against assertions that the government is subjecting the corporate sector to retrospective taxation or triggering a broader compliance crisis.

“Let me just address the issue of historical taxes going back. I think the noise that we have in the economy that has been amplified simply relates to two large companies … which have actually amplified their own failure to follow tax laws into a national crisis,” Guvamatanga said. “We don’t have a national crisis of tax compliance or of historical issues.”

According to Guvamatanga, the non-compliance was driven by historical disparities between official and unofficial exchange rates, allowing firms to exploit foreign currency arbitrage to fund their operations rather than remitting required taxes to the state.

“We all know what was happening then. There was a huge gap between the official and unofficial exchange rate. And those companies, again we know, they were trading using the unofficial exchange rate. They played tax arbitrage, grew their businesses, and invested,” he noted.

He emphasised that withholding transaction-currency taxes deprived the public of essential funding for national infrastructure and public utilities.

Guvamatanga reiterated that state enforcement simply aligns with existing laws and established court rulings.

“We are not putting in new laws. No, it’s the same law which says you pay your tax in the currency of trade. It has always been there. So when you say retrospective, it’s not retrospective. You simply did not follow the law. And the courts have also said the same, that no, you did not follow the law,” he said.

However, corporate leaders and tax analysts have sharply pushed back against Treasury’s narrative, arguing that the dispute is not an issue of non-compliance or evasion, but of “value symmetry” and retroactive enforcement by the Zimbabwe Revenue Authority (ZIMRA).

The corporates and tax analysts challenged ZIMRA’s practice of reopening closed tax years between 2019 and 2024 to reassess liabilities in US dollars while failing to credit previous local-currency tax payments at their historical value when received.

According to the report, taxpayers who previously complied with ZIMRA’s official return architecture or operated under ambiguous statutes are now facing backdated dollar demands.

The private sector contends that when ZIMRA converts past liabilities into foreign currency, it discounts the value of the local currency payments already held by the state due to subsequent inflation and devaluation.

Corporate representatives argue that this creates a double penalty, forcing businesses to meet shortfalls in foreign currency while denying fair value for local-currency overpayments the state already accepted.