Zimbabwe slams US$ transactions with 2% Tax

FINANCE Minister, Prof Mthuli Ncube has subjected US$ transactions to the 2% Intermediated Mobile Money Transfer Tax (IMTT) on the back of yet another overhaul of the tax measures targeted at all foreign currency-denominated transactions.

The Treasury Boss 2024 National Budget blueprint introduced a raft of tax measures which prompted an outcry from citizens following the significant increases in the prices of basic commodities.

The business community maintains that the current price thresholds are not reflective of the true impact of the tax measures introduced last year arguing they have had to eat into their profit margins to satisfy the taxman.

But Ncube again this week, announced new tax measures under Statutory Instrument 80 of 2024 which will see the new measures coming into effect.

“For each withdrawal above the local currency equivalent of USD$100, a local currency equivalent of US$ 0,05. The taxes shall be calculated at the rate of 0,02% on every Zimbabwe Gold (ZiG) or part thereof transacted for each transaction on which tax is payable,” the policy directive reads in part.

Before the latest policy amendment the 2% tax was only charged on ZiG currency while the US$ transactions tax measures were pegged at 1%. The business community was pleading for the total scrapping of the IMTT due to the heavy deductions they were facing.

The policy directive stipulates that provided that if a single transaction on which the tax is payable is equivalent in Zimbabwe Gold (ZiG) of ten thousand one hundred and fifty United States dollars at the prevailing interbank rate shall be chargeable on such transaction; or section 36G (2) of the Taxes Act shall be calculated at the rate of 0, 02% on every US$ or part thereof for each transaction on which tax is payable.

“If a single transaction on which the tax payable is equivalent to or exceeds US$500 000, a flat intermediated money transfer tax of US$10 150 shall be chargeable on such transaction. The Taxes shall be calculated at the rate of 0,02 US$ on every dollar of outbound foreign payment or part thereof for each transaction on which tax is payable.

“The taxes shall be calculated at the rate of 0,02 US$ on every Zimbabwe gold-backed digital token or part thereof transacted for each transaction on which tax is payable,” the SI added.

Market watchers have warned that the latest measures are likely to rattle the already frustrated business community as well as complicate the ease of doing business as investors risk treating the country as expensive especially as far as repatriation of funds is concerned.

Source: NewZimbabwe