Businesses applaud forex transaction tax cut

THE business community has applauded the Government for slashing the Intermediated
Money Transfer Tax (IMTT) on domestic foreign currency transactions from four percent
to two percent effective 1 January 2023.

The Treasury introduced the forex transaction levy in May this year as part of measures to
stabilise the economy in response to wild inflation pressures experienced early this year.

The intervention, among other cocktail of measures, was meant to curb speculative
parallel market activity while shoring up the Zimbabwe dollar and ensuring the
preservation of value.

The business community had raised complaints about the new tax, which they said was a
burden to formal businesses as it was tantamount to double taxation.
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Zimbabwe National Chamber of Commerce (ZNCC)
In his recent 2023 National Budget statement, Finance and Economic Development
Minister, Professor Mthuli Ncube, said after increasing the IMTT on foreign transactions
to four percent, the Government observed that some entities were now preferring to settle
transactions in cash instead of electronic transfers.

“In order to promote the use of the banking system, I propose to align the IMTT on foreign
currency transactions to local currency transactions at a rate of two percent. This measure
takes effect from 1 January 2023,” he said.

In response, the Zimbabwe National Chamber of Commerce (ZNCC) said the 2023 National
Budget has responded favourably to the plight of the business community especially on tax
relief measures, which will see business grow post-Covid-19 pandemic.

“We’re quite happy and excited as businesses that our key input in terms of reduction on
foreign currency IMTT was taken on board,” said ZNCC Matabeleland regional
chairperson, Mr Mackenzie Dongo in an interview.

In its detailed reaction to the budget, ZNCC said it was encouraged by the fact that the
fiscal policy would continue to support vulnerable firms and households going into 2023.

It noted that registered small to medium enterprises (SMEs), rural and urban households
and firms in the sectors that were mostly affected by the tough measures, which were put
in place to curtail the spread of the pandemic including tourism and transport sectors,
were set to get a reprieve.

“On sectoral support measures, revenue-enhancing measures and tax relief measures, the
Government through the 2023 National Budget has responded favourably to the plight of
the business community,” said ZNCC.
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“These include the review of the intermediate money transfer tax on foreign currency
transactions, reinstatement of duty on the importation of basic commodities after the
expiry of the duty’s suspension on November 16, and the support extended to industry and
tourism, as well as the horticultural sector from the drawdown of the Special Drawing
Rights (SDRs).”

In May this year Government suspended duty on basic commodities such as cooking oil,
sugar and maize meal to cushion

Zimbabweans from price shocks occasioned by geo-political developments in Europe and
speculative market behaviour, which caused price increases and artificial shortages.
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Zimbabweans from price shocks occasioned by geo-political developments in Europe and
speculative market behaviour, which caused price increases and artificial shortages.

The import duty suspension was aimed at ensuring access to affordable basic commodities
following a substantial increase in prices of locally manufactured products.

Following the decision not to renew the suspension of duty, captains of industry and
commerce have welcomed the Government saying this would spur the growth of local
producers through enhanced market share. — The Chronicle