Intermediate monetary transfer tax

We have a strange tax as named above. It is 2% on all bank or electronic transfers. It is added back to profit for tax purposes. That is it is not an allowable expense. So far we manually separate this out and enter it as an expense then add it back when calculating tax. This means that entering each transaction
has 3 steps. 1 the transaction itself. 2 the bank charge. and 3 the IMTT. Any suggestions about an easier way?

My approach is a bit different. When I’m entering transactions directly into Manager, I only enter the transaction itself. Then about once a month I download my bank statements, import them into Manager (, and use bank rules ( to categorise the bank charges and IMTT and allocate them to the correct expense accounts (tax expenditure in the case of the IMTT). When my accountant submits my returns she knows that the tax expenditure account is not a deductible expense.

Unfortunately my bank doesn’t provide very nicely formatted statements for easy importing, and only the CSV format works at all. It means I have to do a bit of work in a spreadsheet program to format it suitably for import into Manager, but I’m sure it’s still less work than what you’re doing, and I could probably make it easier by using macros or something.

My nostro statement only comes in PDF format, but there are very few transactions in that, so it’s quick to enter those manually.

Thanks for your thoughts

Alternatively I’m sure you could create a custom tax code ( to automatically add the IMTT when you enter a transaction, but I haven’t done this so can’t verify it.

Whatever you end up doing, if you manage to improve your processes please share what you do. It might help others too.

Don’t forget there are differences between financial accounting and tax accounting. Often, tax filings contain things that are not represented in financial accounts. The question in this case will be whether IMTT is paid or withheld at the time of a transfer, changing the amounts moved, or assessed at the end of a filing period and paid directly to the tax authority. Local accountants should be able to give guidance on this.

It is deducted at the bank on a per transaction basis

Based on what you have said, @Stewart, you may not be handling this correctly. The IMTT is not a bank charge. That is, you are not paying it to the bank. The bank is only collecting it on behalf of the tax authority. So you may wish to create IMTT as a 100% custom tax code and handle it the same way you would an import tax paid directly to the customs organization. This is discussed in this Guide:

So I did that and it appeared on the balance sheet with the other taxes and didn’t effect the profit and loss and I figured that was hunky dory. But then my accounts lady said to me that was wrong and how was I going to get it off the balance sheet as having been acquitted to which I was stumped. So am now thinking of doing it as a normal expense and manually adding it back to the profit at the end of the year as for instance with a donation

Easy things first. An IMTT 100% tax code would appear on your balance sheet as a debit when you paid it to the bank. If you allocate the code to a liability account, it would make that account more negative. If you allocate to an asset account, it would make that account more positive. In other words, the IMTT collected by the bank would be an asset for you. Either way, it could be transferred off the balance sheet to some P&L account with a journal entry.

What I am not understanding is why you or your accountant want to do that (handle it as a tax code). As you have explained things, IMTT is simply an expense (paid to the bank) that is not deductible for tax purposes. Such things are common in various jurisdictions. (For example, customer entertainment expenses paid by a business are real expenses, but are frequently either partially or fully excluded from deduction on income tax filings.)

The fact that IMTT is a tax does not mean it must be handled in Manager via a tax code. Tax codes are applied to line items. IMTT is related to the value of a transfer, but doesn’t offset anything else. In that way, it is just like a property or vehicle licensing tax—just another expense to be recorded when paid and posted to an appropriate expense account.

In my opinion, @GrahamvdR’s first approach was more relevant (whether or not you do this with imported statements and bank rules). This is what my earlier comment meant, when I said that financial and tax accounting are frequently different.

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Thank you for your exhaustive reply. I have now put it as an expense.