ZIMBABWE: 2% tax on electronic transactions stays

By Fungai Lupande

High Court Judge Justice Happias Zhou yesterday scrapped Statutory Instrument (SI) 205 of 2018, which enabled Government to levy 2 percent tax on electronic money transactions above $10.

The tax was introduced as an austerity measure by Finance and Economic Development Minister Professor Mthuli Ncube.

However, Justice Zhou's judgment has no material effect since there is now a Finance Act, which provides for the contested tax, passed on August 21.

The ruling follows an application by Combined Harare Residents' Association (CHRA) director Mr Mfundo Mlilo challenging SI 205-2018 in October last year, imposing the tax.

Mr Mlilo was represented by lawyer Mr Tendai Biti.

Writing on his Twitter handle, Mr Biti confirmed the austerity measure was still in existence.

"It seems the 2 percent is not going anywhere as what has been set aside is the Statutory Instrument 205 of 2018 which introduced the 2 percent tax, but currently the 2 percent tax is based on the Finance Act passed on August 2019, hence ngoma ndiyo, ndiyo," he said.

Minister Ncube introduced the tax in his Transitional Stabilisation Programme (TSP), which is part of Government's drive to turn around the economy.

In his application, Mr Mlilo argued that the Government's decision was made without the necessary backing of the law, citing in particular the amendment of the income tax or the regulation of the tax in a Statutory Instrument.

It was also Mr Mlilo's contention that on October 12 last year, Minister Ncube enacted the Finance (Rate and Incidence of Intermediated Monetary Transfer Tax) Regulations Statutory Instrument (SI205-2018) to legalise and actualise his announcement done on October 1, 2018.

The SI, he argued, remained unconstitutional and a nullity, adding that the minister cannot amend an Act of Parliament in terms of the law.

To this end, Mr Mlilo wanted the higher court to put on hold the minister's decision to review the intermediated tax from five cents per transaction to two cents per dollar.

The pressure group also wanted the immediate suspension of the Finance (Rate and Incidence of Intermediated Money Transfer Tax) Regulations published in SI205 /2018.