HARARE – Finance Minister Professor Mthuli Ncube has dismissed growing calls to scrap Zimbabwe’s 2 percent Intermediated Money Transfer Tax (IMTT), insisting it remains a critical source of national revenue despite widespread complaints that it is stifling business activity.
The embattled levy – which applies to nearly all electronic transfers, including mobile money, ZIPIT, and bank transactions – has become a lightning rod for discontent among business leaders, banks, and even ruling party delegates.
“We are under pressure to reduce or scrap IMTT,” Ncube admitted.
“But this is one of the taxes that have kept us going as a country. We need these resources to run programmes – be it infrastructure, payment for vaccines, and all that. That’s where the resources are coming from.”
He warned that eliminating or cutting the tax would create a budget hole that would need to be filled elsewhere.
“You can allow us to remove IMTT by 0.5%, but are you able to allow us to increase VAT by that percentage?” he asked. “Because we need that revenue – we can’t function without it.”
Economists say the IMTT now accounts for a significant share of Treasury’s income, highlighting the country’s narrow fiscal space.
“Wiping it off has many implications, including increasing the budget deficit, which could stoke inflation,” said Zimbabwe Economics Society vice-president Misheck Ugaro.
“The other option would be cutting expenditure, but that’s not feasible – line ministries are already underfunded.”
Ugaro recommended restructuring rather than abolishing the tax.
“It’s a progressive tax that touches everyone, but perhaps the minister can exempt vulnerable groups or basic transactions. Raising VAT instead would be a worse solution.”
The IMTT’s unpopularity peaked during the ZANU-PF Annual Conference in Mutare last month, where delegates urged government to abolish the tax entirely.
Business leaders have echoed that demand. The Zimbabwe National Chamber of Commerce (ZNCC) said the levy has become “an albatross around the formal economy’s neck.”
In its 2026 Budget Submission, the ZNCC warned that the tax “increases costs, distorts supply chains, and encourages cash usage,” undermining the government’s own cashless economy drive.
ZNCC proposed that Treasury make IMTT deductible for corporate income tax and gradually reduce it to 1% on USD transactions and 0% on ZiG payments – with a roadmap to total elimination by 2027.
The CEO Africa Roundtable (ART) also cautioned that the levy “distorts capital costs and undermines business competitiveness.”
Banks, through the Bankers Association of Zimbabwe (BAZ), blamed the tax for high transaction costs and reduced banking activity.
“If removed, this will incentivise formal banking, expand the taxable base, and reduce cash-based informality,” the association said.
Official data reveal that electronic transactions have plummeted 29% between 2017 and 2024, from 988 million to 703 million.
Point-of-sale transactions dropped 56%, while mobile and ZIPIT transfers fell 24%, as businesses and consumers reverted to cash to avoid the tax.
Analysts warn that this shift to cash has reduced bank deposits, weakened financial inclusion, and made taxation harder.
The Industry and Commerce Portfolio Committee, led by Clemence Chiduwa, has urged Treasury to cut the IMTT rate to 1% and make it deductible for income tax purposes.
“The informal sector largely transacts in cash and remains outside the tax net, thereby placing a disproportionate burden on formal, compliant businesses,” Chiduwa said.
He warned that continued disintermediation would make it “even more difficult to tax citizens.”
The IMTT has become one of Professor Ncube’s most divisive reform tools – a tax that sustains government operations yet suppresses formal growth.
Removing it risks a fiscal vacuum; retaining it risks deepening public resentment ahead of the 2026 political season.
As Ugaro summed up:
“Something has to give. The Minister must find a middle ground that sustains revenue without suffocating growth.”
Source – Business Times
