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2% tax on electronic transactions stays says Zim govt

2% tax on electronic transactions stays says Zim govt

Zimbabwe's Finance Minister Mthuli Ncube said the 2% tax on mobile money and electronic transactions will remain in place despite a High Court ruling this week against the legal instrument behind the levy.

The intermediate levy on all electronic transactions is part of austerity measures implemented by Ncube to generate more revenue for the state.

The Zimbabwe Lawyers for Human Rights (ZLHR) announced that High Court judge, Justice Zhou had set aside Statutory Instrument 205 of 2018 which had introduced the mobile money and electronic transactions tax.

"High Court Judge Justice Zhou has set aside SI205/2018 on the 2% transaction tax. The case was argued by (former Finance Minister and opposition member) Tendai Biti," the organisation stated.

The ruling states that "the Finance Regulations, 2018 which are contained in SI of 2018 are invalid and hereby set aside".

This has triggered debate in Zimbabwe over the implications of the ruling, particularly because parliament fast-tracked the promulgation of the Finance Act of 2019, which also makes provision for the tax.

While Ncube has since confirmed the levy would remain in effect, Biti also said the government would use the Finance Act to defend its course of action.

Ncube was quoted in an official statement as saying: "The judgement will not affect the collection and levy of the Intermediate Money Transfer Tax because the collection of the tax under that Statutory Instrument was subsequently validated by parliament under the Finance Act No.1 of 2019."

As a consequence, the 2% tax will continue to be levied, Ncube added.

Concern over platforms

In April 2019 the Zimbabwe Revenue Authority said revenue collections from the Intermediate Money Transfer Tax amounted to US$242,84-million against a target of US$150-million during Q 2019.

"The revenue head contributed 14, 55% of total collections during the quarter," the state organisation clarified.

A substantial portion of the revenue generated via the tax is from mobile money transactions, which, according to the Zimbabwe Central Bank, remains the dominant payment platform.

Concerns have been raised over alleged abuse of platforms by agents who charge premiums of up to 50% for funds withdrawal from mobile wallets.

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