In the Mid-Year Budget Review, Finance Minister Mthuli Ncube pulled a surprise when he announced that foreign currency transactions are now subject to the infamous 2% Tax.
The 2% tax, also known as the Intermediated Money Transfer, is a tax that government levies on transactions done on digital platforms such as mobile money and bank platforms.
Previously, the tax was only levied on local currency transactions. But now when individuals and companies make forex transactions with Nostro accounts,they will be charged a 2% tax.
Current legislation exempts the transfer of money into and from Nostro
foreign currency accounts from intermediated money transfer tax.
I propose to extend Intermediated Money Transfer Tax to cover foreign
For the avoidance of doubt, transactions conducted by organisations
accredited in terms of the Privileges and Immunities Act (Chapter 3:03)
remain exempt from IMTT.
As with local currency transactions, government will also exempt foreign currency transactions below a certain threshold from the 2% tax. Professor Mthuli Ncube said he will exempt foreign currency transactions not exceeding US$5 from the 2% tax.
Local currency 2% tax
The Finance Minister also reviewed the current 2% tax-free threshold for local currency transactions for individuals from ZWL$100 to ZWL$300.
In line with market conditions, I propose to review the Intermediated Money Transfer Tax-free threshold for local currency transactions from ZW$100 to ZW$300.
In other words, now you won’t be charged a 2% tax when you make a ZWL$30 worth of the transaction. Still, the threshold is too little given how inflation has skyrocketed lately.