By Own Correspondent| Government has gazetted the 2 percent money transfer tax which was announced by Minister of Finance and Economic Development Mthuli Ncube.
The government gazetted Statutory instrument 205 of 2018 Finance (Rate and Incidence of Intermediated Money Transfer Tax) Regulations, 2018 which states that the tax will be chargeable from the day after the promulgation of the regulations.
Here is an excerpt from the new regulations:
“It is hereby notified that the Minister of Finance has, in temv of section 3 of the Finance Act [Chapter 23:041, mole the following regulations: —
1. These regulations may be cited as the Finance (Rate and Incidence of Intermediated Money Transfer Tax) Regulations, 2018.
Amendments to Finance Act [Chapter: 23:04]
Amendment of section 22G Cap. 23:04
2. With effect from the day after the promulgation of these regulations, section 22G the Finance Act [Chapter 23:04] is repealed and the following is substituted:
“”22G Intermediated Financial Transactions Tax
With effect from the day after the promulgation of these regulations, the intermediated money transfer tax chargeable in terms of section 36G of the Taxes Act shall be calculated at the rate of zero comma zero two United States dollars on every dollar transacted for each transaction on which the tax is payable:
Provided that if a single transaction on which the tax is payable is equivalent to or exceeds five hundred thousand United States dollars, a flat intermediated money transfer tax of ten thousand United States dollars shall be chargeable on such transaction.”
Legal watchdog, Veritas is on record pointing out that the Finance minister’s announcement was illegal because the minister does not have the power to change an Act of Parliament through a ministerial statement.
Veritas:said the Minister should have been advised to gazette regulations changing the rate of the tax on the same day as his statement, the 1st October since he has the power to make such regulations under section 3(2) of the Finance Act.
While the minister appeared to have complied with this advice, Veritas said:
“If any provision contained in regulations referred to in subsection (2) is not confirmed by a Bill which –
(a) passes its second reading stage in Parliament on one of the twenty eight days on which Parliament sits next after the coming into operation of the instrument: and
(b) becomes law not later than six months after the date of such second reading;
that provision shall become void as from the date specified in the instrument as that on which the rate of tax duty, levy or other charge shall be amended or replaced, and so much of the rate of tax, duty, levy or other charge as was amended or replaced, as the case may be, by that provision shall be deemed not to have been so amended or replaced.”
This means that if the time limits for confirmation are not complied with, any changes they may have made will fall away as if never made at all [same Act, section 3(3)] [i.e. taxes, etc collected might have to be refunded]