Government clarifies 2% Tax mystery

By Zivanai Dhewa

The Ministry of Information, Publicity and Broadcasting Services has unpacked the mystery surrounding the 2% tax, to allay public fear due to a lot of speculation.

Putting to rest speculation that people’s salaries were going to be taxed when they are being deposited by employers, the Ministry of Information posted that, “Transfers for salaries, wages, allowances and benefits are not subjected to the 2% tax.”

Also to be exempted from the 2% tax, the Ministry said, was “money to and from ZIMRA, tax or duty; intra-corporate transfer; money into specified trust accounts such as the deceased estates and money into and from nostro FCA account.”

Government further explained that the 2% tax on individual transfer was to include the formal sector in the contribution tax bracket.

“The 2% tax is collected whenever a financial institution (FI) mediates transfer of money between two people; or from one person to many people; or from two or more people to one person.”

People should, however, not fall prey to people who charge their products and then add an extra US$0.40 on their charge claiming it to cover the 2% tax.  Government has warned that only financial institutions are allowed to collect the money.

“The 2% intermediated money transfer tax is collected only by registered banks, registered building societies, Reserve Bank of Zimbabwe, Licenced postal companies and mobile banking services,” reads the Government release.

Government has said that it has taken heed of the cry by both consumers and businesses on the burden exerted by the 2% tax and has taken a position to review the intermediated money transfer.  It further revealed that it is crafting a legal instrument to deal with unexplained wealth and deposits and some illicit dealings in the financial services sector.