Online Reporter
Nqobile Bhebhe-Zimpapers Business Hub
ECONOMIC experts say the Government should retain the intermediated money transfer tax (IMTT), stressing its crucial role in safeguarding fiscal revenue stability, only recommending a marginal recalibration to ease pressure on electronic transactions.
In response to Zimbabwe’s increasing use of electronic transactions, amid growing informality and tax avoidance, the Government introduced IMTT to widen the tax base and fund public services.
Businesses generally view IMTT as a significant operational cost that reduces profit margins, increases the burden of double taxation and potentially hinders the adoption of digital payments by encouraging a return to cash transactions.
This emerged on the opening day of the fourth edition of the annual Zimbabwe Economic Development Conference (ZEDCON) in Bulawayo on Wednesday last week.
The objective of ZEDCON 2025 is to bring together researchers, academics, development partners, corporates, economic think tanks and representative organisations to share knowledge, experiences and best practices on how to drive inclusive, sustainable growth by creating jobs, boosting productivity and reducing poverty.
Presenting a talk on a study titled “Navigating Difficult Choices: Is Intermediate Money Transfer Tax a Panacea for Zimbabwe’s Tax Base and Electronic Transaction Growth?, Mr Tonderai Kanyekanye said research findings had shown that IMTT remains one of Treasury’s strongest revenue anchors.“Findings reveal that a one percent increase in IMTT results in a 1,126 percent increase in total revenue, confirming its significant role in enhancing revenue mobilisation,” he told delegates.
At the same time, the study noted, a one percent increase in IMTT causes a 0,186 percent decrease in electronic transaction volumes.
“Since IMTT significantly contributes to about US$0,5 billion of total Government revenue and supports other tax heads, its outright removal is not advisable.”
According to Mr Kanyekanye, the negative impact on electronic transaction volumes can be eased through a carefully measured recalibration of IMTT; a marginal reduction of the tax rate.
“Policymakers should apply simulation and threshold models to test different IMTT rates and transaction thresholds. These tools help forecast impacts on revenue, transaction volumes and economic activity, enabling evidence-based adjustments,” he said.
Mr Kanyekanye emphasised that collaborative dialogue with business and mobile money operators was key to building policy acceptance.
“Transparent policy design fosters trust and reduces informal economic behaviour,” he said, adding that IMTT also broadens the tax base by reinforcing income tax, value added tax, and corporate and dividend tax heads.
“Despite its fiscal importance, concerns arise about the dampening effects on electronic transaction growth and a possible shift towards informality.”
IMTT, introduced in 2018 as a levy on electronic transactions, currently stands at 2 percent for the local currency and 1 percent for US dollar payments.
For foreign currency transactions above US$500 000, a flat maximum tax of US$10 150 applies.
While business has long lobbied for IMTT reduction or scrapping, arguing it compounds costs, given the existing burden of corporate tax, VAT and funding expenses, Treasury has consistently stressed that the tax is indispensable, as it finances key national programmes.
Reserve Bank of Zimbabwe Deputy Governor Dr Innocent Matshe challenged economic researchers to refine models that would provide policymakers with sharper insights.
“If we were to simulate what would happen with IMTT, for example, if it were to be reduced and come up with a metric to say this will be the effect, I would be very, very happy. I have not seen that yet,” he said.
“All I see is, well, it’s no longer useful, we are raising this much, this is damaging this and that. But there are tools for us to do that.
“So, I want to challenge the room that, look, let’s go past this.
“We have invested in a lot of training around dynamic general equilibrium models; let’s use those tools.”
The study highlighted how mobile money platforms have transformed Zimbabwe’s financial landscape, with EcoCash and other platforms recording transaction growth of over 40 percent annually between 2018 and 2023 and monthly values exceeding US$3 billion by 2024.By mid-2024, electronic transactions accounted for nearly 60 percent of all payment flows in the country, driving financial inclusion for about 70 percent of previously unbanked populations.
