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2pc Tax Levied To Foreign Currency Transactions

FinTech

2pc Tax Levied To Foreign Currency Transactions

Treasury has drawn-out the Intermediated Money Transfer Tax, more commonly known as the 2 percent tax, to foreign currency transactions.

Announcing new revenue measures in the Mid-Term Budget Review yesterday, Finance and Economic Development Professor Minister Mthuli Ncube said the move to add hard currency transactions on IMMT was due to the preferred use of hard currency by most businesses, which was compromising the tax head.

“Current legislation exempts the transfer of money into and from nostro foreign currency accounts from intermediated money transfer tax. Following the legalized use of foreign currency in domestic trade, there has been an upsurge in electronic transfers of foreign currency for transaction purposes.

“The current exemption has, thus, created an unfair advantage for taxpayers transacting in foreign currency, thereby raising equity considerations,” said the Finance Minister.

Treasury endorsed the use of the United States to transact alongside the local currency in a move aimed to relieving the public in doing transactions following the emergence of Covid-19.

“I, therefore, propose to extend Intermediated Money Transfer Tax to cover foreign currency transactions, with effect from 1 August 2020.For the avoidance of doubt, transactions for organisations accredited in terms of the Privileges and Immunities Act (Chapter 3:03) remain exempt from IMTT.” He added.

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