Mthuli extends 2% tax to foreign currency transactions

Mthuli extends 2% tax to foreign currency transactions

Staff Writer

HARARE, Finance Minister Mthuli Ncube has proposed to extend Intermediated Money Transfer Tax to cover foreign currency transactions starting from August arguing that the current exemption has created an unfair advantage for taxpayers’ transaction in foreign currency.

The current legislation exempts the transfer of money into and from Nostro foreign currency accounts from intermediated money transfer tax.

“Following the legalised use of foreign currency in domestic trade, there has been an upsurge in electronic transfers of foreign currency for transaction purposes. The current exemption has, thus, created an unfair advantage for taxpayers transacting in foreign currency, thereby raising equity considerations.

“Furthermore, the preference for foreign currency by most business has undermined the revenue generating capacity for IMTT,” said Ncube.

He proposed a maximum tax of US$ 2 000 for foreign currency transactions with a value exceeding US$ 100 000 with effect from 1 August 2020.
Ncube noted that the foreign currency transactions not exceeding US$5 exempted from IMTT.

He also said government will compel VAT Registered Operators to configure Fiscal Devices to capture all transactions in the currency of trade and also produce the respective invoice in the tendered currency.