Mthuli ignores Parly

MOSES MATENGA

Finance Minister Professor Mthuli Ncube has defiantly shut the door on Parliament’s calls to revisit two of Zimbabwe’s most contentious tax measures, the 2% US-dollar Intermediated Money Transfer Tax (IMTT) on electronic transactions and the hike in Value Added Tax (VAT), setting the stage for a deepening standoff over the 2026 national budget.

In a tense Parliamentary session on Wednesday, Professor Ncube made it clear that Treasury would not yield, despite mounting pressure from lawmakers who argue that the IMTT is distorting the financial system, discouraging the use of formal banking channels, and undermining long-term revenue mobilisation.

In his 2026 budget presentation, Professor Ncube proposed reducing the ZiG-denominated IMTT from 2% to 1.5%, while maintaining the 2% levy on US-dollar electronic transfers. Lawmakers have continued to push for a comprehensive review, but Professor Ncube is standing firm.

“The first one is on IMTT tax in terms of the rate. The report does recognise that we have made adjustments in two ways. That we have made it a tax-deductible, or rather turned it into a tax-deductible expense as well as reduced it when it comes to ZiG transactions from 2% to 1.5%. However, the request was that perhaps we should try to equalise on both currencies,” the Minister told Parliament.

“On this one, that is exactly what we do not want to do, actually. We want to make sure that ZiG transactions have an advantage over USD transactions, so we really want to maintain this proposal in this Budget,” he added.

On VAT, Professor Ncube again pushed back, insisting that Zimbabwe remains aligned with regional benchmarks.

“When it comes to the issue of VAT, again, the report does mention that it was a small increase, only 0.5%. Other countries like Zambia and Mozambique are already at 16%, much higher than us, even after the increase, and Tanzania, in fact, is at 18%. If you consider the VAT rates, for example, the VAT rate in Zambia is 16%, Mozambique is at 16% and Tanzania is at 18%,” he said.

“With our new proposal, we are at 15.5%. We are still within some of the VAT rates in some of these countries that I have mentioned. Besides, our 14 core commodities that are consumed by the low-income groups… these have attracted 0% VAT. They are already protected from VAT,” the Minister added.

But Parliament is not convinced. During debate on the Finance Bill, the Parliamentary Portfolio Committee on Budget, Finance and Investment Promotion, led by committee chairperson and Chipinge East MP Lincoln Dhliwayo, warned that failure to review the IMTT on US-dollar-denominated transactions will have far-reaching consequences for both the financial system and public confidence.