Unpacking Intermediated Money Transfer Tax

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Simbarashe Hamudi

ZIMBABWE’S Intermedi­ated Money Transfer Tax (IMTT), contained in the 30th Schedule to the Income Tax Act, remains one of the most far-reaching and debated fiscal measures introduced in the past two decades. The schedule provides an extensive interpretation section de­fining key terms.

A “financial institution” now includes banks, building societies, the Reserve Bank of Zimbabwe, the People’s Own Savings Bank, the Infrastructure Development Bank of Zimbabwe, and the succes­sor to the Agricultural Finance Cor­poration. It also extends to postal service providers licensed to con­duct financial transactions, mobile banking service providers, mobile money transfer platform operators, money transfer services registered under exchange control laws, and, significantly, microfinance institu­tions.

With effect from the year of assessment beginning January 1, 2026, the definition of “financial institution” has been amended to expressly include microfinance institutions registered or required to be registered under the Microfi­nance Act. This change ensures that micro-lenders and deposit-taking microfinance entities facilitating electronic transfers fall squarely within the IMTT framework.

The breadth of the definition reflects Zimbabwe’s evolving fi­nancial landscape, where mobile banking, digital wallets, and mi­crofinance services have become central to everyday transactions. By widening the tax net to include such intermediaries, the govern­ment has sought to capture revenue from the full spectrum of electroni­cally mediated transfers.

The schedule defines “transfer” expansively to include physical, electronic, or any other means of moving money. Where a customer uses an automated teller machine belonging to or controlled by a fi­nancial institution, that institution is deemed to have mediated the transfer. This provision prevents avoidance based on technical argu­ments about the method of transac­tion.

Under paragraph 2 of the sched­ule, whenever a financial institution mediates the transfer of money be­tween persons, from one person to several, or from several persons to one, the institution must pay IMTT to the Commissioner of Taxes on each transaction. In practice, the tax is withheld at source and later remitted to the Zimbabwe Revenue Authority (Zimra).

An important refinement intro­duced in recent years concerns out­bound foreign payments. Whenever a financial institution mediates out­bound foreign currency payments, particularly those funded through the Reserve Bank’s auction or in­terbank markets, it must withhold and remit IMTT on the amount transferred. This provision, insert­ed by the Finance Act 13 of 2023, underscores the tax’s application in cross-border currency transactions.

The tax must be remitted no lat­er than the 10th day of the month following the month in which the taxable transaction occurred. Pay­ment must be accompanied by a prescribed return. Failure to remit IMTT attracts a penalty equal to 15 percent of the unpaid tax. Interest may also accrue at a rate fixed by the minister, unless the Commis­sioner waives the penalty because there was no intent to evade the law.

Financial institutions that have paid IMTT are legally empowered to recover the tax from their cus­tomers. They may debit customer accounts or otherwise treat the tax as a charge levied in the ordinary course of business. This mecha­nism ensures that the ultimate eco­nomic burden falls on transacting parties rather than on the interme­diary institution.

Despite its wide application, the schedule provides an exten­sive list of exemptions. Transac­tions excluded from IMTT include transfers for the purchase or sale of marketable securities and mon­ey market instruments, payments of remuneration, transfers to and from Zimra for tax payments or refunds, and intra-corporate trans­fers between treasury and trading accounts of the same company.

Agricultural and mineral sectors benefit from targeted exemptions. Transfers related to the purchase of tobacco at auction floors, payments to tobacco growers, and transfers for the purchase of cotton or cot­ton seed are excluded. Similarly, transfers to producers or exporters of minerals by the Minerals Mar­keting Corporation of Zimbabwe, and to gold producers by Fidelity Printers and Refiners, are exempt.

Social and developmental con­siderations are also reflected. So­cial transfers by organisations des­ignated as development partners under the Privileges and Immu­nities Act are excluded. Transfers from the African Export-Import Bank (Afreximbank) and certain dedicated funds, including the Car­bon Tax Sinking Fund and the Ag­ricultural Development Fund, are also exempted.

With effect from January 1, 2026, two additional exemptions have been inserted into the defini­tion of “transaction on which the tax is payable.” The first exempts the transfer of capital from a com­pany operating exclusively in an in­ternational financial services centre declared under section 78A of the Banking Act to a company outside that centre. This measure is widely seen as an effort to promote Zim­babwe’s international financial ser­vices ambitions by reducing fric­tion in cross-border capital flows.

The second exemption relates to the Mutapa Investment Fund, Zimbabwe’s sovereign wealth fund established under the Sovereign Wealth Fund of Zimbabwe Act. Transfers of funds from the Muta­pa Investment Fund to the govern­ment, its subsidiaries, or entities listed in the Fourth Schedule to the Act are now exempt from IMTT. This amendment aims to stream­line strategic state investments and internal capital reallocations.

IMTT remains a cornerstone of Zimbabwe’s revenue architec­ture, contributing significantly to Treasury collections. At the same time, its expansive scope and fre­quent amendments highlight the balancing act between revenue generation, financial inclusion, and economic competitiveness. Effec­tive January 2026, IMTT is now an allowable deduction for income tax purposes.

As digital transactions continue to grow and financial innovation accelerates, the IMTT is likely to remain under scrutiny. The 2026 amendments demonstrate the gov­ernment’s intention to refine the re­gime, close gaps, and align it with strategic economic priorities, while maintaining its position as one of the most comprehensive transac­tion-based taxes in the region.

Hamudi is a Tax Partner at Baker Tilly. He can be contacted at simbarashe.hamudi@baker­tilly.co.zw / 0775 399 536