2% punitive tax on money transfers: industry

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THE Confederation of Zimbabwe Industries (CZI) has amplified calls for Finance Minister Mthuli Ncube to scrap the 2% Intermediate Money Transfer Tax (IMTT) when he presents his 2023 budget, saying that the tax was “very punitive” for the industry.

In its 223 budget recommendations, the CZI said, “The tax base is currently too narrow and compliant businesses are already overtaxed. The government places too much emphasis on taxing the declining informal sector and in doing so increasing its tax burden and creating unfair competition with the informal sector.

“The government not only extended the IMMT to US dollar transactions, but actually increased the rate to 4% from the 2% for local currency transactions.

“This is very punitive for the formal sector and also threatens the deposit of US dollars in financial systems as companies try to avoid losing 4% of value each time they transact.”

Ncube introduced IMTT in 2019.

Currently, the IMTT tax is the highest electronic fee tax in Africa.

“We recommend that the 4% IMTT on forex and 2% on local transactions be removed or reduced to 1% to allow businesses and members of the public to breathe,” CZI added.

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