Govt rakes in $166m from 2% tax

Finance Minister Mthuli Ncube introduced a 2% tax on most electronic transactions last October in a bid to widen government's revenue base/PMUSVANHIRI

Government collected $166 million through the revised intermediated money transfer tax introduced last October, the Zimbabwe Revenue Authority (Zimra) has said.

Finance Minister Mthuli Ncube revised the tax from the previous 5 cents for every transaction to 2% for every dollar spent in most transactions above $10, in a bid to broaden the tax base and bridge a gaping budget deficit.

The budget deficit, projected to close the year at $2.86 billion (11.7% of GDP) in 2018, is forecast to come in at $1.56 billion (5% of GDP) this year.

Treasury expects to raise $600 million from the tax in 2019, although inflation is almost certain to guarantee higher collections.

“Cumulative collections (under the intermediated money transfer tax head) for 2018 amounted to US$177.27 million, of which US$11.12 million was collected at the then rate of US$0.05 per transaction during the first 9 months. An amount of US$166.15 million was realised due the revision of the IMTT. Revenue collections grew by 848.30% Individual Tax from US$18.69 million collected in 2017,” Zimra said in its revenue performance statement for 2018 released on Thursday.

Gross revenue collections for the year amounted to $5.36 billion, some 24.71% above the 2018 target of $4.3 billion. Net collections were $5.06 billion.

The 2019 budget has set a tax revenue target of $6.037 billion.