2% tax begins

HARARE - Despite the massive resistance which followed the unveiling of a draconian two percent tax on electronic transactions last week, government has now moved to make the fee lawful with immediate effect.

A general notice published in the Government Gazette yesterday under Statutory Instrument 205 of 2018 gave effect to the new tax, which is part of Finance minister Mthuli Ncube’s fiscal measures aimed at reversing imbalances in the country’s economy.

It also directs financial institutions, the Zimbabwe Revenue Authority (Zimra) and telecommunication companies to extend the collection to all electronic transactions.

The two cents per dollar tax will not apply on transactions which are $10 or less.

There is a cap of $10 000 on the amount of tax to be paid, which means that transfers above $500 000 will attract a flat tax of $10 000.

In addition, the tax will not apply to a range of other transactions namely;

• Transfer of funds by government;
• Transfer of money for the purchase or sale of marketable securities;
• Transfer of money for the purchase or redemption of money market instruments;
• Transfer of money on payment of remuneration;
• Transfer of money to or from Zimra for the payment or refund of any tax, duty or other charges;
• Intra-corporate transfer of money, that is to say, transfer of money between the treasury account and any trading account held in the name of the same company;
• Transfer of money from (but not into) specified accounts;
• Transfer of money into and from nostro foreign currency accounts.”
• Transfer of money by government from the Consolidated Revenue Fund,
• Transfer of money for procurement of fuel by a petroleum company licensed in terms of the Petroleum Act

Analysts told the Daily News yesterday that the struggling consumer must brace for another spike in prices of commodities now that the tax has taken effect.

Vice President Kembo Mohadi had given the impression that the tax was still being worked out although this had done very little to comfort Zimbabweans who are seeing their bond note value tank against the United States dollar, which has been widely adopted in Zimbabwe since inflation woes in 2009.

Zimbabwe’s bond notes were introduced in October 2016 because the supply of US currency had run dry, a decision that was met with widespread protest.

Since Ncube’s announcement a week ago, the tax had not taken effect because it was still to be gazetted.

Notwithstanding, there was panic buying and price spikes on food, fuel and other necessities, with the government announcing price controls to try and curb the outcry.

Government has said it will enforce laws against hoarding supplies to inflate prices, or any price gouging, while denying any fuel shortage despite long lines at filling stations.

Several unions are threatening to launch countrywide demonstrations, with the police infuriating the main Zimbabwe Congress of Trade Unions after outlawing its protests that had been planned for Thursday this week.

Economist John Robertson said the tax will cause more private sector panic than inspire confidence.

“It’s going to cause a reduction in purchasing power and therefore a reduction in government receipts especially value added tax because people will have less money to spend and that will mean they buy less goods which could also force companies to retrench workers or to close down which would cause a loss in pay-as-you-earn and company profit taxes,” said Robertson.

“So the problem is that we are already heavily taxed and that an increase in one tax causes a reduction of tax receipts from other taxes,” he added.

Confederation of Zimbabwe Retailers president Denford Mutashu said the major advantage to be derived from the tax was that it is inclusive of the informal sector, which has grown exponentially since the collapse of the formal sector.

Comments (5)

I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle. Winston Churchill

ace mukadota - 13 October 2018

Lets us give this 0.02 per cent a chance if the extra $3 billion will not make change to our economy . I hope we, Zimbabweans are go to put our heads together to the benefit of next generation.As long as we are divided we will not going anywhere ever the opposition to be given a free reign to the state house and be sabotaged.

Musha - 13 October 2018

This rogue regime. Mthuli you are nuts. Enda unotora mari from your thieving masters who have been milking this country dry for the past close to 4 decades. EDIOT and his gang what did they do with the 5.6bil they borrowed from the domestic market since the illigimate rise to power last Nov? Buying toys for chiefs and madhumbu for their stupid campaign and now want us to pick the tax tab for them. We were never consulted by this rogue regime when all this was being done and now you think you can play God with our lives by making us pay for your sins. Pwetere pwetere lets feel the pain together pamaiba mari did you share the money with us. Iwe Mthuli uri mboko yemunhu but you and your SATANIC masters will answer before God. Mugabe never thought in his entire life he will be humiliated out of power. Your KARMA shall also visit you. You are evil. Dogs with no morals NXAAAAAAAAAAAAAAAAAAA

V - 13 October 2018

Fighting will never build but create hostility and destruction. A loving people begin with you and me to make room for caring , love and peace that with all Zimbabweans that need a better tomorrow under one Mighty God.Lets us think positive like that Big boss of Econet in this moment of our life. Economic History of Germany ,Japan,Mocambique ,Rwanda etc will tell the struggle of human life but unit ,love and peace the goal of purpose will be scored.Economic Struggle can be changed by only one man not the state leader but within them.

Musha - 13 October 2018

Mthuli Ncube is the current celebrity. Chamisa and his friends including baba Jukwa should be in the skip.

Ndiani Ndiani - 14 October 2018

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