Zimbabwe’s Finance and Economic Development Minister, Professor Mthuli Ncube on Thursday reviewed up the Intermediated Money Transfer Tax (2%) to transactions above to ZWL$500 and USD$5.
The infamous tax was previously applied on transactions starting from ZWL$300 and USD$5 respectively. The tax was introduced on foreign currency transactions in July last year.
Ncube made the changes in the 2021 national budget he presented in the National Assembly on Thursday.
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Despite the 2% tax’s unpopularity, the minister maintains that it has “generated substantial resources that have enabled the Government to support various infrastructure projects”, including the COVID-19 response.
The Intermediated Money Transfer Tax was introduced in October 2018 on electronic transactions. Stakeholders protested against the tax which was viewed as an extra burden on the citizenry that was already being overtaxed while businesses claimed the tax increased the cost of doing business.
The government has been supporting the tax saying it was meant to kick-start the collapsed economy warning that austerity measures would bring suffering before a boom.
Some analysts argue that although the tax has caused untold suffering to the nation, it has helped the government a lot as other hard to tax sectors are now contributing to the national revenue.
They, however, urge the government to find a lasting solution to curb tax evasion noting that some businesses in the country only accept cash, especially after the introduction of the tax.