Zimbabwe’s newly appointed Finance and Economic Development
Minister Mthuli Ncube has announced a 2 cents per dollar tax on electronic
transactions as the country moves to widen its tax base.
“I hereby review the Intermediated Money Transfer Tax from
5 cents per transaction to 2 cents per dollar transacted, effective 1 October
2018,” said Minister Ncube.
He said due to the increase in the informalisation of the
economy and huge spikes in electronic and mobile phone-based financial
transactions and real-time gross settlement transactions (RTGS), “there is
[the] need to expand the tax collection base and ensure that the tax collection
points are aligned with electronic mobile payment transactions and the RTGS
system".
While the new tax seems like a downward review, it isn’t as
consumer will now be charged on every dollar transacted, whereas in the past it
was 5 cents for every transaction, including those above $1.
The new 2c per dollar tax effectively means most
Zimbabweans will have to fork out more in tax for every dollar transacted as
more than 96% of the transactions currently conducted in the southern African
country are electronic.
Analysts have described the hikes as catastrophic for
consumers who are already forking out more on value added tax and other bank
charges related to electronic transactions.
READ: Zim
surpasses 2017 tax collection target
“It’s catastrophic for most Zimbabweans, as most of our
transactions are now conducted electronically. It’s an increase in costs on all
transactions and the consumer will be hurt," said Walter Mandeya, an
analyst with Trigrams Investment.
In 2018, 1.7 billion transactions were conducted
electronically.
The latest Reserve Bank of Zimbabwe figures for the half
year to June show electronic transactions done in the country amounted to
$64.7bn.
This means if 2 cents is charged on every dollar
transacted, government coffers would have swelled by $1.3bn.
If similar transactions were to be conducted in the second
half of the year, the country’s treasury can expect to collect at least $2.5bn
for the year from transaction charges alone.
At least $4bn worth of transactions went through Point of
Sales machines in retail outlets, which means on top of the 15% value added tax
that is charged at POS, most transactions will add another 2% tax charge for
every dollar spent at the till.
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