Industry Body Says Tax On Money Transfers Hurts Investment, Competitiveness

The Confederation of Zimbabwe Industries (CZI) has criticised the government’s decision to retain the Intermediated Money Transfer Tax (IMTT), warning that the levy is now undermining production, investment, and the overall competitiveness of formal businesses.

Despite calls for its removal, Finance, Economic Development and Investment Promotion Minister Mthuli Ncube chose to keep the tax in last week’s 2026 National Budget.

Even the ruling ZANU PF party, in one of the resolutions passed at its October 2025 national conference, had recommended scrapping the IMTT.

Instead, Ncube reduced the rate on ZiG-denominated transactions from 2% to 1.5%, while keeping the tax on foreign currency transfers at 2%.

In a position paper released last week, CZI acknowledged that the IMTT has been a convenient short-term source of revenue.

However, it said the cumulative effect on formal businesses, electronic transactions, and multi-stage value chains is “making conditions increasingly difficult for production, investment and competitiveness.” The CZI said:

“We support a tax system that is growth-enhancing, encourages formalisation and digitalisation, and strengthens Zimbabwe’s competitiveness, while maintaining the fiscal space needed for government priorities.”

However, CZI said that from a productive-sector perspective, the IMTT has created several unintended consequences that need to be addressed.

The tax is applied to the full value of each electronic transfer at every stage of the value chain. As a result, the same underlying value is effectively taxed multiple times as it moves from supplier to manufacturer, then to wholesaler, retailer, and finally to the consumer.

CZI said for multi-stage manufacturing and distribution, this resembles a cumulative turnover tax rather than a tax on income or value added, which can work against the goal of promoting deeper domestic value addition. CZI said:

“IMTT applies at a flat rate regardless of profitability or cash-flow position. It is payable even where firms are making losses.

“This is particularly challenging for low-margin formal businesses, where the levy comes directly out of working capital.

“In this sense, IMTT does not adjust to economic conditions at the firm level and can amplify stress in periods of tight liquidity.”

CZI also pointed out that, since the IMTT mainly applies to formal electronic transactions, many cash and informal transactions remain outside its scope.

As a result, the confederation said, some firms and households are choosing to reduce their use of the banking system and digital platforms in order to minimise the tax. CZI added:

“Over time, this weakens financial intermediation, slows progress on digital payments, and narrows the visible tax base.

“This is at odds with national objectives around financial inclusion, digitalisation, and building a broader, more traceable tax base.”

CZI said that, at this stage of Zimbabwe’s development, the costs of the IMTT to formalisation, investment, and competitiveness far outweigh its benefits as a convenient revenue source, and therefore called for its removal.