Govt amends Income Tax Act

HARARE - Government has amended the Income Tax Act to accommodate the levy imposed on mobile money transfers as part of efforts to augment its dwindling revenue.

Finance minister Patrick Chinamasa, in his 2014 National Budget presented in December, stated that every mobile money transaction will attract a $0,05 levy.

Treasury is desperate to boost revenues which have been declining due to slow-down in economic activity evidenced by low aggregate demand, falling international metal prices, high cost of borrowing and limited access to capital.

“With effect from January 1, 2014, the thirtieth schedule (“Intermediated Money Transfer Tax”) to the Income Tax Act (Chapter 23:06) is amended in paragraph.... by the insertion of the following definition
“mobile banking service” means a service that allows customers of a financial institution or cellular telecommunication or telecommunication service operator licensed or required to be licensed under the Postal and Telecommunications Act or other intermediary to conduct any number of financial institutions involving the transfer of money through a mobile device such as a mobile phone or personal digital assistant, and for which the financial institution, operator or intermediary involved receives a fee,
commission, premium, interest or other reward,” read part of the amendment.

Chinamasa — whose budget was short on funding — said “the emergence of mobile technology has opened doors to innovative technology which facilitates transfer of funds through mobile phones,” adding that “this product should, however, conform to the tax principle of fairness, hence, the current tax on similar products such as Automotive Teller Machines (ATM) and Point of Sale (POS) should apply.”

“This new phenomenon has provided greater flexibility and financial inclusivity to the majority of the population in remote areas where banking services are not available notwithstanding the positive impact of mobile banking services on the welfare of the then financially excluded members of our society,” he said.

Zimbabwe’s largest mobile telecommunications company, Econet Wireless Zimbabwe (Econet), which operates
EcoCash — the country’s largest mobile money transfer platform — yesterday advised its customers of an increase in transaction costs.

“We would like to inform our valued customers that a transaction tax of five cents will be levied on
applicable transactions effective January 1, 2014. This adjustment is in line with the recently
announced budget statement by the government,” said Econet.

Since its launch in 2011, 2,3 million Zimbabweans have registered for EcoCash mobile money accounts, outnumbering all of Zimbabwe’s traditional bank accounts combined.

Over one million of these accounts are active and push $200 million of volume over the EcoCash platform every month.

NetOne’s OneWallet, Telecel Zimbabwe’s TeleCash and CABS’s TextaCash are some of the mobile-based funds transfer platforms to be taxed by government.

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