THE Zimbabwe Stock Exchange (ZSE) has set up a fund to ensure that no stockbroking firm collapses in the event that fiscal appeals courts rule in fa
vour of the Zimbabwe Revenue Authorities (Zimra).
ZSE chief executive Emmanuel Munyukwi this week said the fund would assist stockbroking firms that might fail to make Value Added Tax payments backdated to January 2004.
“The stock market regulates that stockbrokers should be insured to the tune of $3 billion, while the equities market is covered at $6 billion. With the fund available we can guarantee you that stockbrokers would remain in business regardless of the (court) outcome,” Munyukwi said.
Munyukwi said he was convinced that most stockbroking firms were in a sound financial position and could easily pay Zimra should it receive a judgement in its favour.
Bart Mswaka, the ZSE deputy chairman, said backdated VAT payments were unlikely to affect stockbrokers’ operations.
“There is no problem with the operations of brokers at present. The current bull-run on the stock market is a sure guarantee that brokers will be in a position to pay off their debts,” said Mswaka.
Zimra wants all the country’s 15 stockbrokers to pay VAT backdated to January 2004. Stockbrokers are appealing against the backdated VAT payments, arguing that the VAT Act clearly exempted them from such payments.
The stockbrokers had also received an assurance from Finance minister Herbert Murerwa before the promulgation of the VAT Act that they would not be compelled to pay the tax.
However, Zimra charges that the stockbrokers’ position is informed by an “erroneous” interpretation of the VAT Act.
Registered stockbrokers with the ZSE are Intermarket Stockbrokers, FBC Securities, EFE Securities, Sagit Stockbrokers, Imara Edwards Security, Renaissance Securities, Fidelity Securities, M Lynton-Edwards Stockbrokers, Remo Investments Brokers, Interfin Securities, Kingdom Stockbrokers, Mast Stockbrokers, ABC Stockbrokers, New Africa Securities and D Vrettos Stockbrokers.
Pending the Fiscal Appeals Court determination, all stockbrokers have been paying VAT on their transactions since May.
“Most stockbroking companies have already made sufficient provisions in the event that they are required to pay the tax. They would do so with no interruptions on their clients’ settlements,” Mswaka said.
Last week High Court Judge President, Rita Makarau, threw out an appeal made on behalf of the stockbrokers by the ZSE, saying the ZSE did not have a legal basis to bring the case before the court.
Justice Makarau dismissed the case with cost.
Justice Makarau declined to make a ruling on the merit of the case, saying she had to be satisfied that the case was properly before the court.