HARARE – The government has come up with some measures in an attempt to deal with the disparity between the Reserve Bank of Zimbabwe (RBZ) auction exchange rate and the alternative market which remains a concern to businesses and a source for arbitrage.

Arbitrage is the simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset’s listed price, according to Investopedia.

There has been a surge in the use of US Dollars in the market. Some service providers pegged prices of services in line with parallel market exchange rates so as to lure customers to pay using forex.

Adoption of the foreign currency auction system, in place of a fixed rate, has been hailed as a step in the right direction in terms of bringing sanity in the markets. However, there have been calls for total independence of the auction system to ensure that the exchange rate reflects the true value of local currency.

According to a Government Gazette, Statutory Instrument 127 of 2021, a natural or legal person shall be guilty of a civil infringement if he or she without Exchange Control authority, uses the foreign currency obtained directly or indirectly from a foreign exchange auction or an authorised dealer for a purpose other than that specified in the application to partake in the auction or in the application for foreign currency.

In the event of default in compliance with the set parameters, “the civil penalty shall provide for a combination of a fixed penalty of the amount of one million Zimbabwe dollars or an amount equivalent to the value of the foreign currency obtained (whichever is the greater amount)  and a cumulative penalty over a period not exceeding ninety days of five per centum of the outstanding amount of the fixed penalty for each day (beginning on the day after the service of a civil penalty order) that the fixed penalty or any outstanding amount thereof remains unpaid by the defaulter.”

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A natural or legal person shall be guilty of a civil infringement if he or she, being a seller of goods or services not authorised by law to charge for them exclusively in foreign currency, refuses to allow any buyer thereof to tender payment for them in Zimbabwe dollars at the ruling exchange rate. This comes after some shops have been refusing the local currency preferring hard currency.

In the event of default, “the civil penalty shall provide for a fixed penalty of the amount of fifty thousand Zimbabwe dollars or an amount equivalent to the value of the foreign currency charged for the goods or services in question (whichever is the greater amount);  and a cumulative penalty over a period not exceeding ninety days of five per centum of the outstanding amount of the fixed penalty for each day (beginning on the day after the service of a civil penalty order) that the fixed penalty or any outstanding amount thereof remains unpaid by the defaulter.”

 An authorised dealer shall be guilty of a civil infringement if he or she submits to the RBZ an application for foreign currency or exchange control authority, or a return or any other document in connection therewith, without exercising reasonable due diligence to verify the correctness of the information in or accompanying the application, return or document, with the result that the application, return or document contains information that the authorised dealer knows or ought to have known to be false in any material respect.

In the event of default, “the civil penalty shall provide for a combination of a fixed penalty of the amount of five million Zimbabwe dollars; and a cumulative penalty over a period not exceeding ninety days of five per centum of the outstanding amount of the fixed penalty for each day (beginning on the day after the service of a civil penalty order) that the fixed penalty or any outstanding amount thereof remains unpaid by the defaulter,” reads part of the gazette.

It revealed that a natural or legal person shall be guilty of a civil infringement if he or she sells, displays or offers goods or services for sale at an exchange rate above the ruling exchange rate, or imposes (for the predominant purpose of encouraging payment in a foreign currency) a premium on Zimbabwe dollar payments or allows a discount on foreign currency payments.

In the event of default in complying, the civil penalty shall provide for Zimbabwe dollars or an amount equivalent to the value of the foreign currency charged for the goods or services in question (whichever is the greater amount);  and a cumulative penalty over a period not exceeding ninety days of five per centum of the outstanding amount of the fixed penalty for each day (beginning on the day after the service of a civil penalty order) that the fixed penalty or any outstanding amount thereof remains unpaid by the defaulter.

A natural or legal person shall be guilty of a civil infringement if he or she, being a seller of goods or services, issues to a buyer thereof a receipt in Zimbabwe dollars for payment received in foreign currency, or records sales other than in the currency in which the sale was conducted. 

Previously ZIMRA said business is supposed to issue receipts in the currency of transaction and encouraged members of the public to report if they get receipts in currencies they did not pay in.

“In the event of default in complying with subparagraph, the civil penalty shall provide for a fixed penalty of the amount of fifty thousand Zimbabwe dollars or an amount equivalent to the value of the foreign currency charged for the goods or services in question (whichever is the greater amount);  and a cumulative penalty over a period not exceeding ninety days of five per centum of the outstanding amount of the fixed penalty for each day (beginning on the day after the service of a civil penalty order)  that the fixed penalty or any outstanding amount thereof remains unpaid by the defaulter,” reads the statement.

Also revealed that No civil penalty order may be issued more than twenty-four months from the date when the default or alleged default occurred or ceased to occur.

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