The Finance Minister Mthuli Ncube while presenting the mid-term budget review statement yesterday extended the Intermediated Money Transfer Tax the infamous 2% tax to foreign transactions or transactions made in foreign currency, the Chronicle reports.
Mthuli said since they legalised USD payments electronic payments have surged, he also said many transactions were now in USD and said this was presenting an unfair advantage to those who are paying for their transactions in USD:
Current legislation exempts the transfer of money into and from nostro foreign currency accounts from intermediated money transfer tax.
Following the legalised use of foreign currency in domestic trade, there has been an upsurge in electronic transfers of foreign currency for transaction purposes.
The current exemption has, thus, created an unfair advantage for taxpayers transacting in foreign currency, thereby raising equity considerations.
Furthermore, the preference for foreign currency by most business has undermined the revenue generating capacity for IMTT.
I, therefore, propose to extend Intermediated Money Transfer Tax to cover foreign currency transactions, with effect from 1 August 2020.
For the avoidance of doubt, transactions for organisations accredited in terms of the Privileges and Immunities Act (Chapter 3:03) remain exempt from IMTT
The Minister also proposed that low-income earners be exempted from paying tax by raising the taxable income bracket from $2000 to $5000