Guide to Intermediated Money Transfer Tax (IMTT) Exemptions in Zimbabwe
Legislation Reference: Section 36G and the Thirtieth Schedule of the Income Tax Act [Chapter 23:06] as read with Section 22G of the Finance Act [Chapter 23:04] and relevant statutory instruments.
A Dive
The Intermediated Money Transfer Tax (IMTT) commonly known as the transaction tax is levied whenever a financial institution (bank, mobile money operator, or financial service provider) mediates the transfer of money between entities or individuals.
To protect critical economic sectors, prevent double taxation, and maintain financial market liquidity, the law explicitly exempts specific financial transactions from IMTT. This document outlines all statutory exemptions and provides practical explanations for businesses and investors.
Statutory List of IMTT Exempt Transactions and Explanations
1. Low-Value Transactions Below Statutory Thresholds
- Statutory Provision: Thirtieth Schedule, Paragraph 1 & Section 22G of the Finance Act.
- Explanation: Any transfer below the minimum prescribed threshold (e.g., transactions of US$10 or less, or the equivalent local currency statutory floor) is exempt from IMTT.
- Business and Investor Impact: Protects micro-transactions, small retail payments and low-income consumer transfers from tax friction.
2. Payment of Remuneration and Salaries
- Statutory Provision: Thirtieth Schedule, Paragraph 1(c).
- Explanation: Transfer of money by an employer to an employee for net salary, wages, allowances, or employment benefits.
- Business and Investor Impact: Prevents double taxation on employee income, which is already subject to Pay As You Earn (PAYE). Payroll processing accounts marked as remuneration transfers are shielded from the 2% charge.
3. Intra-Corporate Account Transfers
- Statutory Provision: Thirtieth Schedule, Paragraph 1(e).
- Explanation: Movement of money between accounts owned by the same corporate entity (e.g., transfers between a company’s main treasury account, capital account, and branch operating bank accounts).
- Business and Investor Impact: Enables efficient corporate cash-flow management and internal liquidity reallocations across different bank accounts without incurring transaction tax penalties. Note: Accounts must be registered under the exact same entity/company name.
4. Tax, Duty, and Statutory Remittances to/from ZIMRA
- Statutory Provision: Thirtieth Schedule, Paragraph 1(d).
- Explanation: Transfers made to the Zimbabwe Revenue Authority (ZIMRA) for tax payments (e.g., Corporate Income Tax, VAT, Customs Duties, PAYE) and tax refunds disbursed by ZIMRA back to taxpayers.
- Business and Investor Impact: Ensures businesses are not penalised or taxed simply for fulfilling their legal tax compliance obligations or receiving legitimate tax refunds.
5. Marketable Securities and Capital Market Transactions
- Statutory Provision: Thirtieth Schedule, Paragraph 1(a).
- Explanation: Money transfers made for the purchase, sale, or settlement of marketable securities listed on recognized stock exchanges (such as the Zimbabwe Stock Exchange – ZSE, and Victoria Falls Stock Exchange – VFEX).
- Business and Investor Impact: Essential for capital markets. Equity investors, institutional fund managers, and stockbrokers can buy and sell listed shares without incurring IMTT on the transaction volume, preserving investment yields.
6. Money Market Instruments and Fixed Income Securities
- Statutory Provision: Thirtieth Schedule, Paragraph 1(b).
- Explanation: Transfers of money for the purchase, issuance, or redemption of money market instruments, including Corporate Bonds, Commercial Paper, Treasury Bills, Negotiable Certificates of Deposit (NCDs), and Fixed Deposits.
- Business and Investor Impact: Protects liquidity in the banking system and debt capital markets. Investors can park capital in short-term interest-bearing instruments and redeem maturities tax-free.
7. Outflows from Specified Trust Accounts
- Statutory Provision: Thirtieth Schedule, Paragraph 1(f).
- Explanation: Money transfers made from (note: not into) designated statutory trust accounts operated by licensed professionals, such as:
- Legal Practitioners Trust Accounts (under the Legal Practitioners Act)
- Estate Agents Trust Accounts (under the Estate Agents Act)
- Estate Administrators Trust Accounts (under the Estate Administrators Act)
- Business and Investor Impact: Protects clients and property buyers/sellers. For example, when a conveyancing lawyer transfers property sale proceeds from their trust account to a property seller, that payout is exempt from IMTT.
8. Government and Public Finance Management Transfers
- Statutory Provision: Thirtieth Schedule, Paragraph 1(h).
- Explanation: Transfers of money by the Government from the Consolidated Revenue Fund (CRF) or public funds established under Section 18 of the Public Finance Management Act (PFMA).
- Business & Investor Impact: Prevents transaction taxation on public funds, inter-governmental budget disbursements, and statutory operational transfers to ministries and departments.
9. Pension Funds and Beneficiary Disbursements
- Statutory Provision: Thirtieth Schedule, Paragraph 1(i).
- Explanation: Transfers of money to registered pension funds or payouts made by pension funds to retirees and beneficiaries.
- Business and Investor Impact: Protects retirement savings, social security contributions, and pension payouts to elderly citizens from being eroded by transaction taxes.
10. Procurement and Sale of Petroleum Products
- Statutory Provision: Thirtieth Schedule, Paragraph 1(j).
- Explanation: Money transfers associated with the procurement, production, or wholesale/retail sale of petroleum products by oil companies licensed under the Petroleum Act.
- Business and Investor Impact: Prevents cascading tax costs on fuel, which is a key baseline cost driver for logistics, manufacturing, and general business operations across the economy.
11. Transfers into and from Approved Nostro / Foreign Currency Accounts (FCAs)
- Statutory Provision: Relevant Exchange Control Directives and specific statutory additions under the Thirtieth Schedule.
- Explanation: Specific inter-bank transfers or intra-bank movements involving designated foreign currency accounts (e.g., offshore capital inflows, direct investment inflows, and designated inter-bank settlements) as exempted by ministerial notice or exchange regulations.
- Business & Investor Impact: Facilitates foreign direct investment (FDI), cross-border trade settlements, and export proceeds processing.
Key Takeaways and Compliance Advice for Businesses
- Banking Platform Setup: Ensure your company’s banking profile is appropriately categorized with your commercial banks (e.g., registering intra-company accounts and payroll accounts correctly) so that exemptions apply automatically.
- Supporting Documentation: When executing large non-standard transactions (such as trust disbursements or capital market purchases), keep supporting agreements, board resolutions, and ZIMRA exemption letters on file for audit trail purposes.
- Non-Deductibility Notice: Under Section 16(1)(d1) of the Income Tax Act, any IMTT paid on taxable business transactions is disallowed as an income tax deduction. Therefore, utilizing legal exemptions is vital for cost optimisation.
Summary of Covered Exemptions:
- Low-value transactions below statutory minimums.
- Payroll and salary payouts to employees (subject to PAYE).
- Intra-corporate account transfers within the same business entity.
- Tax and statutory remittances to and from ZIMRA.
- Capital market transactions (ZSE and VFEX listed stock trading).
- Money market securities (Treasury Bills, bonds, and fixed deposits).
- Outflows from professional trust accounts (Lawyers, Estate Agents, Administrators).
- Government disbursements from the Consolidated Revenue Fund.
- Pension fund contributions and payouts.
- Licensed petroleum sector transactions.
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