ZIMBABWE: Mobile money clampdown erodes 2c tax earnings

THE clampdown on mobile money transfer services is negatively impacting on the Intermediated Money Transfer Tax (IMTT) popularly known as 2c tax, which contributed poorly to revenue performance in the fourth quarter of 2020.

The country’s monetary authorities had raised a red flag over rampant abuse of mobile money platforms, which had become a source of speculative illegal forex dealings and drove wild exchange rate volatility.

The Reserve Bank of Zimbabwe (RBZ) took sweeping measures in the second quarter of 2020, which included the ban on mobile money agents, a $5000 cap on mobile money transfer per day and one mobile money line per person among other interventions.

While the measures have been celebrated for restoring sanity in the financial services sector, the Zimbabwe Revenue Authority (Zimra) says these have crippled the IMTT tax head.

“The Intermediated Money Transfer Tax performed below target and only contributed 6.63 percent to the quarterly revenue,” said Zimra in its 2020 fourth quarter performance report issued at the weekend.

“Monetary policy measures instituted in Q2 2020 have continued to impact negatively on the tax head as activity is limited on mobile money platforms, which had become a haven for parallel market activities.”

SOURCE: CHRONICLE / Prosper Ndlovu