Intermediated Money Transfer Tax (IMTT) Amended Tax Rates.

With effect from 1 January 2023, The FINANCE (No. 2) ACT, 2022 revised down Intermediated Money Transfer Tax (IMTT) from 4% to 2% on all USD transactions.

Amendment of section 22G of Cap. 23:04

With effect from the 1st January, 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 two United States dollars or part thereof on every United States dollar transacted for each transaction on which the tax is payable:”.

How to correctly account for Intermediated Money Transfer Tax (IMTT).

• • What is the IMTT tax and which transactions are affected by this tax
  • Can IMTT be part of the cost of an asset?
  • Can the IMTT be expensed?
  • What are the tax implication of the IMTT?

In determining the accounting for the IMTT, the first and important question is whether IMTT can result in an asset, liability, income or expense?

IMTT is a tax on electronic payments or transfers made by a payer (both individual and corporate). IMTT does not affect the receiver of the payment. Payments are normally made to settle consideration for goods and services acquired or for settlement of obligations among other reasons. Hence, IMTT is payable on acquisition of assets, payment for expenses and settlement of liabilities by the payer and has no effect on income as it is not charged to the payment recipient.

Can IMTT be part of the cost of an asset?

IFRS requires that the cost of an asset include the purchase price and other costs that are necessary to bring it to the location and condition for intended use. The cost of an asset also includes non-refundable taxes levied on acquisition of the asset. Value Added Tax (VAT) input on expenditure is excluded from the cost of an asset or expense when the payer is a VAT vendor (i.e. when refundable to a VAT Vendor). However, no IMTT is refundable to the payer.