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OpenIMTT Undermining Competitiveness And Promoting Informalisation, Says NCC Report
The National Competitiveness Commission (NCC) has said the Intermediated Money Transfer Tax (IMTT) is undermining business competitiveness and pushing the economy towards greater informalisation.
In its latest report analysing the IMTT’s impact, the NCC noted that while the tax initially helped boost state revenue, it continues to create price distortions, hinder financial inclusion, and stifle economic growth.
The NCC’s recent submission contributes to the growing consensus among economic stakeholders that the levy on electronic transactions should be abolished. Said the NCC:
High IMTT on digital transactions discourages the use of plastic money and boosts the holding of currency outside of bank.
This practice will undermine the financial intermediation role of banks, thus local industry failing to access concessionary funding, which is critical for enhancement of national competitiveness.
The Zimbabwe National Chamber of Commerce (ZNCC) and the Confederation of Zimbabwe Industries (CZI) have also raised concerns about the impact of IMTT on business.
The IMTT was introduced in 2018 but has been adjusted several times to balance revenue generation with economic dynamics and stakeholder feedback.
Currently, the IMTT rate is 2% for transactions in local currency and 1% for transactions in US dollars. A flat fee of US$10,150 applies to transactions of US$500,000 or more, while transactions up to US$10 are exempt.
NCC said the IMTT has led to a cascading tax burden, increasing the cost of doing business. This has made Zimbabwean goods and services less competitive in both local and international markets.
The tax is also driving economic activity toward cash-based transactions, particularly in the informal sector, where goods are sold at lower prices to avoid the levy. This shift reduces the use of formal financial services and affects the effectiveness of monetary policy.
Comparisons with other countries in the region show that Zimbabwe’s 2% rate for local currency transactions is higher than rates in Tanzania (0.5%), the DRC (1%), Cameroon (0.2%), and Uganda (0.5%).
The report recommends that the government reduce the IMTT rate to align with regional standards, allow it as a deductible expense, and provide exemptions for essential transactions.
More: Business Weekly
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