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Nelson Gahadza
Zimpapers Business Hub
Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, says the reduction of the Intermediated Monetary Transfer Tax (IMTT) by 0,5 percent to 1,5 percent was a direct response to public demands.
IMTT is a transaction-based tax levied on electronic money transfers introduced in 2018 to widen the tax base, especially to include the informal sector, and mobilise resources to fund key public services and infrastructure projects.
The tax has helped reduce funding constraints at a time when the Government has limited access to external long-term concessionary financing due to outstanding debts to global lenders, as well as the effect of decades-long Western sanctions.
“We have listened to Zimbabweans; they said they want IMTT to be reviewed downwards. Others have said, ‘Minister, get rid of it.’ We listened to those voices, and we reduced it,” he said during a post-budget interview.
However, he noted that the reduction comes with the creation of a funding gap.
“We tolerated a small, modest 0,5 percent increase in value-added tax (VAT) and other countries are way higher than Zimbabwe. Surely 0,5 percent can be managed,” said Minister Ncube.”
Confederation of Zimbabwe Retailers (CZR) Dr Denford Mutashu, said the IMTT was a high cost to businesses and individuals alike, and the reduction on ZIG transactions was a good beginning.
“It is a very good beginning, a starting point, even though our expectation was that it be reduced to 1 percent so that it motivates and stimulates formal transactions in the local currency,” he said.
However, he said the increase in VAT will also be met with mixed feelings by businesses because the cost will actually be passed on to the transacting public.
“But we are actually going to continue lobbying because this is just a statement of intention, but we will continue to lobby so that at least we remain aligned with the government,” he said.
Economic expert, Mr Persistence Gwanyanya, said the reduction in the IMTT should be seen as part of the broader economic and financial reforms.
He said the slight reduction of 0,5 per cent is also complemented by reforms elsewhere.
“The Minister has indicated that the Treasury has implemented reforms in a number of sectors, the agriculture sector, infrastructure, a whole lot of sectors, and these reforms are continuing.
“We view the review of the IMTT as part of the broader reforms, which are needed to reverse the informalisation of the economy,” he said.
He added that the government is trying to balance the virtues of tax reduction and the need to maintain the traction on especially the infrastructure projects.
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