Bankers Association of Zimbabwe (BAZ) has urged the Government to reduce the current 4% Intermediated Money Transfer Tax (IMMT) being charged on local money transfers to at least 2% in order to promote local transactions.
A source from BAZ who spoke to this publication said that the four percent IMMT was punitive in nature and the formal businesses were feeling the brunt of this tax.
“The four percent IMMT being charged on local transactions is punitive in nature; hence the call by BAZ to have it reduced to at least two percent. Because of this punitive 4 percent IMMT, the foreign currency deposits as well as local money transfers have drastically reduced as people are finding ways to circumvent this tax,” said the source.
The source added that the IMM tax that was initially gazetted as a means to promote local currency transaction has only punished formal businesses that usually use formal channels of transacting and has also reduced inflow of foreign currency to the local banking system.
“Companies are now opting to use the traditional and informal methods of transacting in order to evade the high IMM tax. Some businesses are now opting to keep money at their premises fearing to be milked by this high IMM tax,” added the source.
The same source added that Government should avoid levies being charged on smaller money transfers to ensure that the mobile money operators do not pass the burden to their consumers.
IMM tax is tax collected in terms of Section 36G as read with the 13th Schedule of the Income Tax Act (Chapter 23:06)This tax has been in place since 2003 and the major changes have been the rate of tax and exemptions of certain transactions from tax.