by Tafara Chibanda

HARARE – The Ministry of Finance and Economic Development has recently announced the revision of Intermediated Money Transfer Tax (IMTT) rates for transactions involving Zimbabwe Gold (ZiG) and United States dollars (USD). 

The new rates impose a flat 2% tax on both currencies, aiming to eliminate pricing distortions that arose from varying rates used in interbank transactions.

The adjustment in IMTT rates comes in response to persistent calls from businesses urging authorities to lower or completely abolish the tax. Business stakeholders have expressed concerns that the IMTT imposes a significant financial burden, particularly considering the multiple taxes already imposed on enterprises. They argue that this tax inadvertently leads to inflated prices of goods and services.

According to a report by The Sunday Mail, IMTT is a tax levied on electronic transfers or payments made by individuals or corporate entities. Importantly, the tax affects the payer conducting the transaction to settle obligations for received goods and services, rather than the recipient. The changes to the IMTT framework were communicated through Statutory Instrument 80 of 2024. The modifications include the following:

1. Amendment of Section 22B, which relates to Automated Financial Transactions Tax, specifically adjusting the fee applicable to withdrawals exceeding the equivalent of one hundred United States dollars.

2. Repeal of Section 22G, which previously detailed the Intermediated Money Transfer Tax. It has been replaced with revised regulations specifying the tax rates for transactions denominated in Zimbabwe Gold (ZiG) and United States dollars.

According to the updated regulations under Section 22G, the IMTT charges are as follows:

– For transactions involving Zimbabwe Gold [ZiG], the tax rate is 0.02 for every ZiG or part thereof transacted. A flat IMTT of the equivalent in ZiG of ten thousand one hundred and fifty United States dollars will apply if a single transaction equals or exceeds five hundred thousand USD.

– For transactions in United States dollars, the tax rate remains at 0.02 for every USD or part thereof. An identical flat IMTT of ten thousand one hundred and fifty USD applies if a transaction reaches or surpasses the five hundred thousand USD threshold.

– Outbound foreign payments will be subject to an IMTT of 0.02 USD on every dollar or part thereof transacted.

– Digital tokens backed by Zimbabwe gold will incur an IMTT of 0.02 USD on every token or part thereof transacted.

These revisions aim to streamline the IMTT system and address concerns raised by businesses regarding the tax’s impact on pricing and overall business operations.