Oliver Kazunga, Senior Business Reporter
TAX experts have called on Government to consider scrapping the two percent Intermediated Money Transfer Tax on transactions, saying its continued existence was burdening registered businesses through double taxation.
Finance and Economic Development Minister, Professor Mthuli Ncube, introduced the two percent tax in October last year as part of measures to broaden the revenue base under the Government’s Transitional Stabilisation Programme.
During a tax seminar organised by BDO Chartered Accountants to analyse the 2020 national budget in Bulawayo on Wednesday, tax experts expressed concern over the two percent tax, saying Government should consider exempting the formal sector from paying it as it was tantamount to double taxation.
“Are we not double taxed because I am paying my two percent tax and the next thing, I pay my tax again? That’s double taxation. I thought the two percent tax was meant to punish those that aren’t tax compliant especially the informal sector but now you are punishing us,” said one of the tax experts.
Last year, market analysts projected that Government has the potential to raise $3,4 billion annually through the Intermediary Money Transfer Tax of two cents, a development that will go a long way in widening room for capital funding and retooling of the manufacturing sector.
Another tax expert said the two percent tax was controversial and called on Zimra to lobby the Government to exempt the formal sector from paying the tax. “The two percent tax is quite controversial and probably not fair talking also from an accounting pointing of view,” said another expert.
The tax experts also queried the continued existence of the two percent tax saying it was increasing the cost of doing business.
“As Zimra, we administer the acts that are passed into law and we have no eye to see this is fair or unfair. Secondly, we do not lobby for the removal of any taxes, the laws are passed by your representatives in Parliament and I think you should lobby them to push for the removal of this tax if you are not happy,” said a Zimra official who refused to be named.
Minister Ncube is on record saying the two percent tax on electronic transactions will continue for much longer as it covers for tax defaulters.
He has said that the two percent tax is not designed to hurt ordinary people and companies but to help boost domestic revenue mobilisation. — @okazunga.