BY MTHANDAZO NYONI
THE Zimbabwe National Chamber of Commerce (ZNCC) has called for a review of the Intermediated Money Transfer Tax (IMMT) on foreign currency transfers from 4% to 2%, arguing that the current tax regime has increased production costs.
In an effort to stabilize the economy, reduce inflation and support the Zimbabwean dollar, the government announced a cocktail of measures in May this year, including doubling the IMMT on foreign exchange transfer from 2 % to 4%.
The levy on foreign currency withdrawals has been reduced from 5 cents per transaction to 2% of the amount withdrawn.
But at a pre-national budget consultation held recently in Harare, ZNCC members said the current tax regime was backward.
“There is a proposal to revise the tax on intermediated money transfers from a rate of 4% to 2% for foreign currency transactions, because if someone transfers $1,000, they will pay 4%. If someone transfers an equivalent amount of USD 1,000 in RTGS, their charge will be 2%,” said Tapiwa Gumbo, who spoke on behalf of the group that focused on the topic. Revenue and tax relief measures.
“So if you pay 4%, you are punished for a transfer in US dollars, while for someone who transfers the equivalent amount in local currency, the charge is 100% less.
“There is therefore a need to level the playing field,” he said.
Gumbo said the application of the tax was unfair.
“Here we’re talking about the application to say that other business expenses are deductible when you do your income tax.
You can deduct certain expenses like salaries and other expenses, but you cannot deduct this IMTT. The application on businesses is different from consumers because it becomes a cost of production,” he said.
He encouraged the Zimbabwe Revenue Authority to be efficient in issuing tax clearance certificates as delays cost businesses dearly.
“So if you’re a tax-compliant business, you remit and submit your files on time, but your tax clearance certificate hasn’t been processed, that means if you’re transacting now but you don’t have a tax clearance certificate, no one will know you are tax compliant until you have a certificate.
“Thus, the delay in processing this certificate subjects you to a withholding tax of 30% on your gross receipts.
The proposal here is to put in place a mechanism to expedite the processing of tax clearance certificates by the tax administration and probably, the ideal period would be within two weeks,” he said.
The ZNCC also said value-added tax should be paid based on actual money received by the company. The organization advocated for an allocation of foreign exchange to all exporting industries to enable them to buy raw materials to produce the goods they export. The chamber also proposed to protect the agricultural sector as well as the clothing and textile industries.
Experts say Zimbabwe has one of the highest mobile money transaction taxes in Africa, a development that is hurting millions of small business owners and low-income groups as the cost of life continues to increase.
Civic group Zimbabwe Coalition on Debt and Development recently said that increasing the IMMT on US dollar domestic remittances from 2% to 4% had a disproportionate negative impact on the majority of the poor who have small balances. in foreign currency.
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