Africa-Press – Zimbabwe. GOVERNMENT has rejected business calls to scrap the 2% Zimbabwe’s intermediated money transfer tax (IMTT), opting instead for a partial overhaul that lowers the ZiG rate, keeps the US dollar levy unchanged and ties new tax-deductibility benefits to strict compliance requirements.
Zimbabwe introduced the IMTT back in October 2018 as part of its revenue-increasing measures.
This tax, commonly known as the 2% tax, was a step in the government’s plan to widen the tax base and fund public services.
However, employers have now called for the abolishment of the tax, arguing that it has now become a heavy burden on formal businesses, contributing to the growth of a highly-informalised economy in Zimbabwe.
Business member organisations calling for the removal of the IMTT include Employers Confederation of Zimbabwe and Zimbabwe National Chamber of Commerce.
“Mr Speaker Sir, consistent with government’s commitment to supporting business growth and maintaining fiscal stability, I, therefore, propose to review the IMTT framework as follows: reduce the IMTT rate on ZiG-denominated transactions from 2% to 1,5%, in order to promote use of local currency and lower transaction costs. IMTT on foreign currency transactions will be maintained at 2%;
“Designated IMTT as a tax-deductible expense for purposes of Corporate Income Tax computation; and expand the definition of Financial Institution for the purpose of IMTT to include Microfinance Institutions,” Finance, Economic Development, and Investment Promotion minister Mthuli Ncube announced in the 2026 National Budget presented yesterday.
He said to qualify for IMTT tax deductibility, taxpayers should be registered for Corporate Income Tax, Personal Income Tax, and Value Added Tax where applicable, be VAT-fiscalised and interfaced with Fiscal Data Management System, where applicable, and be up to date with submission of tax returns and payments.
“These compliance conditions will ensure that the benefit of deductibility accrues only to tax-compliant operators, thereby reinforcing ongoing efforts to broaden the tax base and encourage formalisation of businesses,” Ncube said.
“These measures are expected to result in an estimated revenue forgone of approximately US$89 million per annum, representing a fiscal adjustment consistent with prudent management. These measures take effect from January 1, 2026.”
The small changes come despite the minister admitting the tax was now stifling business.
“IMTT remains a major and stable source of non-discretionary revenue, contributing about 8% of total tax revenue annually,” Ncube said.
“However, its high incidence on business transactions and liquidity flows has made it distortionary, particularly in a dual-currency environment.
“Consequently, there have been consistent calls by various stakeholders for a review and redesign of the IMTT framework to mitigate unintended economic distortions whilst maintaining the integrity and predictability of public finances.”
However, Ncube committed to continue reviewing the overall ease of doing business framework.
“Implementation of ease of doing business reforms: The ongoing review of the various licences, fees and charges is expected to continue with the overall impact of lowering the domestic costs of production, promoting competitiveness of local products,” he said.
He added that the government was undertaking comprehensive economy-wide regulatory and compliance cost reduction as part of the ongoing ease of doing business reforms.
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