Intermediated Money Transfer Tax – (IMTT)

1. PREAMBLE
The Intermediated Money Transfer Tax (IMTT) is levied on transferred amount per section 36G of the Income Tax Act [Chapter 23:06] as read with the 30th schedule to [Cap. 23:06] and these provisions were recently amended. This paper seeks to highlight some of the changes, anticipate the impact from an accounting perspective, and to amplify frequently asked questions about the tax.

2. THE TAX
2.1. Effective Date
The tax became effective on Friday the 12th of October 2018.
2.2. Rate
The rate of tax is 2% of the amount being transferred up to a maximum of $10,000 i.e. for transferred amounts exceeding $500,000.
2.3. Scope
2.3.1. Transfer of money between two persons via financial institution intermediary;

2.3.2. Transfer from one person to two or more persons; and

2.3.3. Transfers from two or more persons to one person

The financial institution shall pay IMTT to the Commissioner on each such transaction.

2.3.4. Transfer of money from one financial institution to another as an intermediary for another person the other financial institution shall not be liable for IMTT.
2.4. Exemptions
2.4.1. Transfer of money for the purposes of sale of marketable securities;
2.4.2. Transfer of money for the purposes of purchase or redemption of money market securities;
2.4.3. Transfer of money on payment of remuneration;
2.4.4. Transfer of money to or from ZIMRA for the payment or refund of any tax, duty or other charges;
2.4.5. The intra-corporate transfer of money i.e. movement of money between a treasury account and any other trading account held in the name of the same company;
2.4.6. The transfer of money from (but not into) specified trust accounts;
2.4.7. The transfer of money into and from Nostro Foreign Currency Accounts (FCAs); and
2.4.8. The transfer of money by government from the Consolidated Revenue Fund (CRF) or from funds established in terms of section 18 of the Public Finance Management Act (PFMA).

2.5. Collection
2.5.1. The intermediary financial institution shall collect the tax and recover from the person they have intermediated for.
2.5.2. The intermediary financial institution shall remit the tax to the Commissioner no later than the 10th day of the month following the date of transfer

3. FREQUENTLY ASKED QUESTIONS
3.1. Is the IMTT deductible in computing Income Tax?
Section 16(1)(d) of the Income Tax Act [Chapter 23:06] prohibits the deduction of tax upon the income of a taxpayer or interest thereon. This is not a tax on income and therefore should be deductible.
3.2. How shall financial institutions identify transactions that are exempt from those that are not?
Some I.T. platform are being used to pay both remuneration and other trading transactions and so financial institutions’ IT system shall need to be primed to be able to identify the exempt transactions.
3.3. Does the movement of funds belonging to same individual but between two bank accounts not qualify for an exemption in the same vein as that of movement between treasury account and accounts in the same name for corporates?
Currently that provision is not there and so movement between to accounts belonging to same person attract the tax.
3.4. Why have transfers to and from Pension funds, medical aid funds, benefit funds been excluded from the exemptions?
This is an issue to highlight to the revenue authorities. Normally incentives are targeted and not blanket, depending on the intended induced effect and so it would be noble for exemption on transfer to and from some of these funds on social and or moral compassionate grounds.
3.5. Exemptions on transfers from Trust accounts are limited to specific trust accounts?
Exemptions on transfers from trust accounts (intermediary in nature as well) have been restricted to specific ones being administered by lawyers, but there are similar accounts serving the same function being administered by other professions such as accountants and bankers, to mention a few.
3.6. Remuneration is broad in definition and so will the financial institutions be able to make judgement calls on remuneration payments?
3.7. Are bond notes and RTGS balances money as defined in the 30th schedule?

4. Impact on Financial Reporting
4.1. Exemption on marketable securities transactions. (Items 2.4.1 and 2.4.2. above)
All other specified assets except for the exemptions above shall attract the IMTT and this increases the cost of the property. The deductibility of the tax for CGT purposes shall affect the deferred tax.
4.2. The IMTT is a transaction tax and not tax on a person’s income. The question is whether this is covered by IAS 12 and it’s growing significance may mean a revisit on qualitative and quantitative materiality for disclosure in the financial report.
4.3. Should the IMTT be capitalised to the cost of assets, (a) if it is deductible or (b) if it is not an allowable deduction.

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About the Author : Zvino Mapetere

Zvino is Tax lecturer at CAA.

6 Comments
  1. Erick Masimba January 28, 2019 at 11:55 - Reply

    Is the tax charged on P.O.S transactions upon purchase.

  2. Musarurwa Watson March 20, 2019 at 18:16 - Reply

    Hi Zvino & Ackson,
    May you kindly assist me with the clause from the statutory instrument that supports the below for IMTT
    2.3.4. Transfer of money from one financial institution to another as an intermediary for another person the other financial institution shall not be liable for IMTT.

    Kind regards

  3. Tapiwa Z Chiri March 20, 2019 at 20:53 - Reply

    Good day

    The financial institutions subject to IMTT remittance (for their personal transactions) or they are exempt on the technicality of being the intermediary

  4. Stanley Mutsambiwa March 30, 2019 at 11:29 - Reply

    Thanks for clarifying the treatment of IMTT on income tax

  5. Beverly Olivier September 16, 2019 at 05:05 - Reply

    Is the IMTT decutable as an expense when paying for good for resale

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