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Minister of Finance and Economic Development Professor has ‘finally’ extended tax on Electronic transactions which was left unclear and unattended to.This is Despite Prof Mthuli Ncube introducing the intermediated money transfer tax (IMTT), popularly known as the 2 percent tax, in 2018 in an effort to capture electronic transactions including those executed on mobile money.
Minister Mthuli Ncube recently said the “Government (finally) extended tax on income generated from trade in electronic services. However, he said there is no clarity on what constitutes trade in electronic services”, and proceeded to set parameters of what falls under this category.
With the use of modern electronic payment growing, systems continue to grow globally, and experts say it is critical to increase investment into fiscal tools that enable the country to widen its ability to tax electronic transactions.
This then allows, Zimbabwe to significantly grow the tax revenues the central Government requires, which can be channelled towards development programmes including infrastructure investments and social service delivery.
Such an opportune moment has come as the world is increasingly moving towards digitally enabled economies, made more compelling following the outbreak of the Covid-19 pandemic, whose impact put a huge strain on production.
These Digital technologies allow businesses, foreign or local, to operate in a country without a physical presence, which poses challenges for traditional taxation and allows for billions worth of transactions to go untaxed.
Covid 19 pandemic also widened inequalities and exerted increased pressure on public debt constraints as countries were forced to borrow to meet urgent food security and medication requirements as well as rescue packages for businesses.
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