Mthuli Ncube Clarifies On Tax, Says Transactions Above $500k Will Pay A Max Of $10 000

   

The issue of the high tax on electronic transactions just won’t die. Here is a statement from Mthuli Ncube, the Minister of Finance and Economic Development:

PRESS STATEMENT BY THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT, HON. PROF. MTHULI NCUBE ON THE INTERMEDIATED MONEY TRANSFER TAX

At the occasion of the presentation of the 2018 Mid-Term Monetary Policy, I announced a review of the Intermediated Money Transfer Tax from the current 5 cents per transaction to 2 cents per every dollar transacted. Further details pertaining to the tax are as follows:

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The 2 Cents per Dollar tax, will apply on transactions of $10 and above only. Transactions below $10 will be exempt from this tax. There is a cap of $10 000 on the amount of tax to be paid. This implies that transfers above $500,000 will attract a flat tax of $10,000.

In addition, the following transactions will be exempt from the proposed tax:-

• Intra-company transfer of Funds including transfer from intermediary accounts;

• Transfer of funds on purchase and sale of equities;

• Transfer of funds on purchase and redemption of money market instruments;

• Transfer of funds for payment of salaries;

• Transfer of funds for payment of taxes;

• Transfer of funds to intermediary accounts, for example, conveyancers;

• Transfer of funds in respect of foreign currency related payments; and

• Transfer of funds by Government.

This tax review comes into effect on the date of gazette of the relevant Regulations.

Hon. Prof. Mthuli Ncube Minister of Finance and Economic Development

It’s welcome that there is a floor and a ceiling to this new tax. However, the tax is still too high considering one is already taxed elsewhere. That the minister wants to collect from people who are outside of the tax radar is a good thing but it is quite punitive on all of us.

At least maybe the minimum should have been higher than that.

It looks like Ncube has now been advised more properly of the legal way to do this. He now says the tax will become effective on the day of gazetting. This is because his earlier pronouncement that the tax was effective 1 October was illegal.

He did not give any indication of whether this is a permanent arrangement or not. I guess until further notice, our pay has just been reduced by 2%.

The issue of cash

To avoid people flooding banking halls, the minister might as well tax cash withdrawals even more. As it is, it is cheaper to queue for the little cash one can get and from then on it is free to pay your way around using cash.

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