Banks are calling on Finance Minister Mthuli Ncube to scrap the Intermediated Money Transfer Tax (IMTT), saying it is stifling formal business, discouraging digital payments and undermining economic growth.
In submissions ahead of the Mid-Term Budget Review expected this month, industry players said the tax has become a major structural barrier to financial intermediation, investment and economic expansion, arguing that cutting the rate from 2% to 1.5% has not eased its negative impact.
The calls come as the government seeks to deepen financial inclusion, widen the tax base, and drive private-sector-led growth.
The Bankers Association of Zimbabwe (BAZ) warned that firms are struggling with high borrowing costs, rising taxes, and growing regulatory obligations, which are eroding competitiveness.
“IMTT is a significant hindrance to banking sector growth and fuels informalisation and tax evasion,” BAZ said in its submission.
BAZ has proposed either scrapping IMTT immediately or replacing it with a lower, tiered structure that favours productive sectors, value-chain payments and other strategic transactions, with a clear plan to eventually eliminate it.
According to BAZ, cutting the tax to around 1% or removing it altogether would boost government revenue by encouraging businesses and consumers to move from cash to the formal banking system, increasing transaction volumes and widening the tax base.
The association said banks are ready to support the shift through merchant onboarding, promotion of digital payments and value-chain integration, but argued that the IMTT remains the biggest obstacle to those efforts.
“The broad application of IMTT increases the cost of transacting for businesses and consumers, discourages digital financial usage and formalisation, encourages migration toward cash-based and informal transactions, and suppresses transaction volumes,” BAZ said.
BAZ warned that the decline in bank deposits has weakened the financial sector’s capacity to extend credit, constrained lending to productive sectors and reduced the effectiveness of monetary policy.
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