Zimbabwe Report from Richard Rukundo, Associate, IBFD
High Court annuls intermediated money transfer tax law
On 18 September 2019, the High court of Zimbabwe scrapped the 2{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} transaction tax which was introduced by the government through the Finance (Rate and Incidence of Intermediated Money Transfer Tax) Regulations, 2018 (The Regulations). The Regulations were introduced as a revenue enhancement measure after the 2018 Budget. Given the shortage of cash in the country, most transactions in Zimbabwe are electronic and the government has thus sought to tap into this as a revenue measure.
Highlights of the intermediated money transfer tax law include;
In its holding, the court found that the Minister of Finance usurped parliament’s powers by introducing the regulations that changed the tax rate in the Finance Act thereby effectively amending the Act.
Court determined that this action undermines the separation of powers principle where the executive through the minister amends a law passed by parliament. Court thus revoked the Regulations and the new tax rates introduced by those Regulations.
Zimbabwe collects a substantial amount of revenue in this tax given that most transactions are online due to shortage of cash in the country.