HARARE – Industry says the controversial Intermediary Money Transfer Tax should be amended in the upcoming 2019 National Budget to improve the ease of doing business in the country.
The Confederation of Zimbabwe Industries (CZI), in its budget proposal submissions, pointed out that the two percent tax was eating into profits, highlighting that while it was ideal, it needed to be tweaked to match the operating environment.
“We recommend that in the 2019 budget the exemptions for tax are widened to include loan draw-downs and loan repayments of the corporates and that an explicit commitment is made that the tax will be significantly modified by the end of 2019, so that the negative impact of the compounding of the text value chains is eliminated and replaced by more sustainable revenue measures,” the industry body said.
Under the new tax, transactions between $10 and $500 000 attract a two cents per dollar tax in measures announced by Finance minister Mthuli Ncube to raise revenue and reduce government borrowing, especially through the issuance of Treasury Bills and a Reserve Bank of Zimbabwe (RBZ) overdraft facility.
CZI — which torched a storm a fortnight ago after endorsing the controversial law — has previously said the tax was “a necessary shock-therapy measure for the economy”.
Sifelani Jabangwe, CZI president, recently proposed that the tax expire by December 2019, suggesting that this should be done through a time-bound legislation to demonstrate government’s sincerity and give the market confidence.
This comes as President Emmerson Mnangagwa on Thursday said the tax was “here to stay”.
“Yes, initially when it was articulated by the minister of Finance and Economic Development it had overlooked a lot of people who in our view ought to have been left out.
“He did his best to re-explain it and move out from compliance many categories whom we think would cause a prohibitive manner in doing business.
“The minister of Finance will be making a budget statement soon. I think it is before the end of this month. I can safely say he will also look at that in order to improve. I don’t know whether it will be your position or mine… but I can assure you the tax is here to stay as it has helped us plug our deficit,” Mnangagwa told delegates at the recently-ended 3rd annual Public Sector Audit Conference in the capital.
Other industry bodies like the Zimbabwe National Chamber of Commerce have spoken against the tax noting it will be unsustainable in the long-run for local companies.