Firms push for the removal of the controversial IMTT

LIVINGSTONE MARUFU

Business leaders are pushing for the removal of the contentious Intermediate Money Transfer Tax (IMTT)  imposed on domestic transactions saying  the tax is harming  their operations.

The tax was enacted in 2018 to force the unorganized sector to pay taxes, but it has overtaxed formal taxpayers and has driven  some of them out of business.

“These transaction-based taxes increase the cost of doing business in Zimbabwe and reduce our competitiveness as a country, and hence at some point should be removed,” BridgeFort  company secretary Michael Nicholson said.

Mike Kamungeremu, managing director of Tendo Electronics, concurred , saying that the IMTT tax is a tax on an expense rather than a revenue source.

“IMTT, therefore, is in fact more of a cost or an expense and such should qualify as a deduction the same way other transaction-based taxes such as customs duties, and stamp duties are allowed as a deduction,” Kamungeremu said.

He said the intermediate transaction tax has a “compounded effect” on the supply chain due to the incremental tax charged from the producer to the consumer.

Section 16(1) (d1) of the Income Tax Act prohibits the claiming of the tax on income as an expense for income tax calculation purposes.

Kamungeremu said to cushion the supply chain layers against the increased cost of production; the cost is passed on to the consumer in the form of price increases across all goods.He said other effects of the tax to be taken into consideration include the double taxation effects of the 2% or 4% tax that has the effect of imposing tax on tax.

Addington Chinake, chairman of Simbisa Brands Limited, stated that the IMTT and other current, excessively harsh tax laws must be addressed immediately.