‘IMTT hurts firms’
LIVINGSTONE MARUFU
The country’s business lobby organisations are pleading with Treasury to either lower or eliminate the 2% intermediated money transfer tax (IMTT) rate on transactions involving US dollars and Zimbabwe Gold (ZiG) due to worries that the statutory obligation is harming local companies, Business Times can report.
It follows Treasury’s recent standardization of the IMTT tax rates on US dollars and ZiG for amounts up to US$100 or local currency equivalent.
In its submissions to the Parliament and the Treasury, the Zimbabwe National Chamber of Commerce (ZNCC) said the tax was punitive.
“…..the IMTT should be lowered from 2% to 1%, a measure which is expected to promote the use of electronic money in line with the central bank’s goal.
“Our position as ZNCC is that IMTT should be tax-deductible for businesses. The burden of the IMTT tax is huge on business and therefore, the Chamber proposes that the Ministry of Finance, Economic Development and Investment Promotion should allow the IMTT to be tax deductible and it should be removed when remitting tax to Zimbabwe Revenue Authority,” part of ZNCC submissions reads.
It continued: “IMTT has overly taxed the formal taxpayers and businesses are incurring the IMTT even when paying tax dues to Zimbabwe Revenue Authority [ZIMRA], thus it is a tax on tax.
“ The IMTT exerted pressure on the already overtaxed formal businesses.”
“If this step is to be taken, the IMTT should be removed altogether with the withdrawal levy and deposit fees including on high-cost bank accounts.”
The full impact of the IMTT is borne by compliant enterprises that are already subject to other tax headings, according to a Confederation of Zimbabwe Industries official who requested not to be named.
“Since it is now applied to all transactions, including those that also pay corporate tax, it needs to be tax deductible just like other transaction taxes. In addition, the IMTT is also very heavy on businesses that operate on thin profit margins, with most of our members indicating margins of about 6%.
“What this implies is that if 2% is charged on transfers that would ideally generate 6%, effectively profit margins would be reduced by 33%,” he said.
