2 cents tax comes into ef­fect to­day

The Herald (Zimbabwe) - - Front Page - Tawanda Musarurwa Se­nior Busi­ness Re­porter

THE In­ter­me­di­ated Money Trans­fer Tax, now com­monly known as 2 cents tax, an­nounced by Govern­ment last week comes into ef­fect to­day af­ter it was gazetted yes­ter­day.

This tax was gazetted in Statu­tory In­stru­ment 205 of 2018 pub­lished in the Govern­ment Gazette.

The new tax has been in­tro­duced by way of amend­ments to sec­tion 22G of the Fi­nance Act (Chap­ter 23:04) and the Thir­teenth Sched­ule of the In­come Tax Act (Chap­ter 23:06). Reads part of the Statu­tory In­stru­ment: “With ef­fect from the day af­ter the pro­mul­ga­tion of these reg­u­la­tions, the in­ter­me­di­ated money trans­fer tax charge­able in terms of sec­tion 36 G of the Taxes Act shall be cal­cu­lated at the rate of zero comma zero two (0,02) United States dol­lars on ev­ery dol­lar trans­acted for each trans­ac­tion on which the tax is payable: pro­vided that if a sin­gle trans­ac­tion on which the tax is payable is equiv­a­lent to or ex­ceeds five hun­dred thou­sand ($500 000) United States dol­lars, a flat in­ter­me­di­ated money trans­fer tax of ten thou­sand ($10 000) United States dol­lars shall be charge­able on such trans­ac­tion.”

Fi­nance and Eco­nomic De­vel­op­ment Min­is­ter Pro­fes­sor Mthuli Ncube pro­posed the tax last week, say­ing it sought to ex­pand Govern­ment’s ca­pac­ity for cap­i­tal fund­ing and re­tool­ing of the man­u­fac­tur­ing sec­tor.

Last Fri­day, he an­nounced up­per and lower lim­its for the In­ter­me­di­ary Money Trans­fer Tax and types of trans­ac­tions to which the tax would not ap­ply.

The Statu­tory In­stru­ment ex­tends the types of trans­ac­tions the tax will not ap­ply to.

Ac­cord­ing to SI 205 of 2018, “trans­ac­tion on which the tax is payable does not in­clude any of the fol­low­ing trans­ac­tions — the trans­fer of money for the pur­chase or sale of mar­ketable se­cu­ri­ties; the trans­fer of money for the pur­chase or redemp­tion of money mar­ket in­stru­ments; the trans­fer of money on pay­ment of re­mu­ner­a­tion; the trans­fer of money to or from the Zim­babwe Rev­enue Author­ity (ZIMRA) for the pay­ment or re­fund of any tax, duty or other charges, and the in­tra-cor­po­rate trans­fer of money be­tween the Trea­sury ac­count and any trad­ing ac­count held in the name of the same com­pany.

“The trans­fer of money from (but not into) spec­i­fied trust ac­counts; the trans­fer of money into and from nos­tro for­eign cur­rency ac­counts; the trans­fer of money by Govern­ment from the Con­sol­i­dated Rev­enue Fund or from funds es­tab­lished in terms of sec­tion 18 of the Pub­lic Fi­nance Man­age­ment Act; the trans­fer of money to any pen­sion fund or to ben­e­fi­cia­ries of such a fund; the trans­fer of money for the

pro­cure­ment, pro­duc­tion or sale (whole­sale or re­tail) of a petroleum prod­uct by a petroleum com­pany li­censed in terms of Part IV of the Petroleum Act (Chap­ter 13:22), and the trans­fer of money in­volv­ing a trans­ac­tion other than one men­tioned in the fore­go­ing para­graphs, if the value of trans­ac­tion is $10 United States dol­lars or be­low.”

Since its pro­posal, the In­ter­me­di­ated Money Trans­fer Tax has re­ceived mixed re­ac­tions from dif­fer­ent sec­tions of so­ci­ety, with some un­scrupu­lous re­tail­ers mov­ing on to in­crease prices over the last few days de­spite the tax hav­ing not come into ef­fect.

Ear­lier in the week, Pres­i­dent Em­mer­son Mnan­gagwa said the In­ter­me­di­ary Money Trans­fer Tax would be im­ple­mented as it was crit­i­cal in trans­form­ing the econ­omy, which has suf­fered from two decades of stag­na­tion.

The Pres­i­dent said the tax was not de­signed to hurt or­di­nary peo­ple and com­pa­nies, but to help the man­u­fac­tur­ing sec­tor get funds for re­tool­ing and mod­erni­sa­tion, as the econ­omy gears to ramp up pro­duc­tion.

He said there was room for the tax to be re­fined go­ing for­ward if sug­ges­tions were prof­fered, to cre­ate a win-win sit­u­a­tion for in­di­vid­u­als and com­pa­nies on one hand, and the econ­omy on the other.

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