ZwNews Chief Correspondent
The recently announced tax charge of 2 cents per each dollar spent through electronic payment system is not yet legally operational, as no Statutory Instrument (SI) has been gazetted in that regard- a constitutional watchdog has said.
In his fiscal measures statement, Minister of Finance and Economic Development, Mthuli Ncube said the tax was to be operational immediately. “I hereby review the Intermediated Money Transfer Tax from 5 cents per transaction to 2 cents per dollar transacted effective 1 October 2018.
“I am therefore directing financial institutions, banks, and Zimbabwe Revenue Authority, working together with telecommunications companies to extend the collection to all electronic transactions,” he said.
However, according to VERITAS Zimbabwe, a constitutional watchdog, the tax should not be operational until necessary procedures have been followed like SI has been gazetted.
VERITAS says the legal in Zimbabwe does not give a minister power to change any law, let alone an Act of Parliament, by a ministerial statement, and that instead Ncube should had been advised to gazette regulations changing the rate of the tax, on the same day as his statement, that is 1 October 2018.
The watchdog says if the financial institutions had already implemented the directive, should have done so at their own peril, as they would be up for a constitutional challenge, when the minister makes appropriate regulations, for any attempt to back date the effectiveness may trigger resistance.
“Unlike the former Constitution, the current supreme law specifically commands respect for vested rights,” says VERITAS.
The constitutional watchdog, says the minister can still make the relevant regulations.
Be that as it may, the pronouncements has already brought some uneasiness among some sections in the country’s highly informalised economy.
Some companies are alleged to have started downsizing orders, as speculative tendencies chip in. At the same time, others are quizzing how this new fiscal and monetary implications will be reported in financial statements.
As no guidelines, on how to report or treat the separation of the Real Time Gross Settlement from Foreign Currency Accounts in companies’ balance sheets has been given.