Mthuli Ncube increases tax on money transfers

THE new Minister of Finance and Economic Development has increased the charges on money transfers to 2c per every dollar transacted from 5c per every transaction in order to widen the tax base and ensure that Government gets enough to fund its budget.

Finance Minister Professor Mthuli Ncube said that to date in 2018, 1.7 billion electronic and mobile phone-based financial transactions and RTGS transactions went through as compared to 50 million four years ago.

"I hereby review the Intermediated Money Transfer Tax from 5 cents per transaction to 2 cents per dollar transacted, effective 1 October 2018. 37. I am therefore directing financial institutions, banks and ZIMRA, working together with telecommunication companies to extend the collection to all electronic financial transactions."

Treasury introduced the Intermediated Money Transfer Tax with effect from 1 January 2003 through the Finance Act 15 of 2002. The tax was set at 5 cents per transaction, which was a specific tax. However, Prof Ncube said due to the increase in informalisation of the economy and huge increase in electronic and mobile phone-based financial transactions and RTGS transactions there is need to expand the tax collection base and ensure that the tax collection points are aligned with electronic mobile payment transactions and RTGS system.