Zim govt drops USD tax by 75% in over a year: Were domestic remittance volumes declining?

In an amendment made by the Zimbabwean Ministry of Finance, the Intermediary Money Transfer Tax (IMTT) on USD transactions has been dropped to 1% from 2% (the tax was instituted at 4%).

"With effect from the 1st June, 2023, section 22G (“Intermediated Money Transfer Tax”) of the Finance Act [Chapter 23:04] is amended by the repeal of paragraph (b) and its substitution by— “(b) zero comma zero one United States dollar or part thereof on every United States dollar transacted for each transaction on which the tax is payable."

Statutory Instrument 88 of 2023

This new adjustment suggests that there is a 75% drop in the IMTT since it was applied to USD transactions in May 2022. The elephant in the room is the domestic remittance market because the IMTT tax on USD money movement affected operators in the space as the government was getting a sizable chunk and they, the operators, had to figure out how much they were going to be charging their customers.

A Consumer Survey Report from 2022 conducted by the Reserve Bank of Zimbabwe, FinMark Trust (FMT), ZimStat and the Zimbabwean Ministry of Finance seemed to reveal that domestic remittances are on the decline.