Mthuli pledges tax overhaul in 2026 budget 

LIVINGSTONE MARUFU

Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube has pledged a sweeping tax overhaul in the 2026 National Budget, promising to ease the pressure on businesses by reviewing the contentious 2% Intermediated Money Transfer Tax (IMTT), cutting fuel levies, and raising the tax-free threshold.

Addressing business leaders at the Post Mid-Term Budget Review meeting in Harare last week, Professor Ncube said the reforms—set for announcement in November, will be carefully targeted to restore consumer spending, cut compliance costs, and improve competitiveness.

“We will fine-tune the IMTT, including to make the tax deductible, but that will certainly be in the November budget,” he said. “We will definitely not remove the 2% tax but review it downwards. In the main 2026 National Budget presentation, we are also going to address the tax-free threshold to restore consumer spending.”

The minister also hinted that Pay-As-You-Earn (PAYE) and fuel levies will be revised, alongside broader regulatory changes to reduce the burden on companies.

“The Treasury will not just lower compliance fees but cut a number of steps to ease the doing of business,” he said. “We were about to make an announcement but then realised that if we go with a big bang approach, some fees and levies needed for effective regulation of our market sectors would be affected. So we’re now going step by step. But I can assure you, we’ll move with speed.”

Ncube said reforms had already been rolled out in the milk, dairy, livestock, and stock feed sectors, with agriculture next in line.

“For agriculture, we’ve already agreed that we’ll allow for crops, horticulture, and fertiliser agricultural products with manufacturing,” he said.

Economist Dr Prosper Chitambara said the proposed measures could transform Zimbabwe’s investment climate if implemented quickly.

“If quickly and efficiently addressed, the reforms are poised to create a conducive business environment that will attract both domestic and foreign investment and promote sustainable economic growth,” Dr Chitambara told Business Times.

Treasury’s plan also includes digitising tax administration, integrating data systems, and expanding the tax base through formalising informal operators. The scale of informality remains significant—ZimStat’s 2025 Economic Census found that 76.1% of Zimbabwe’s 204,798 operational establishments are informal, underscoring the disconnect between regulation and economic reality.

Licensing remains another choke point for businesses. A single supermarket can require as many as 31 different authorisations, while major retailers such as OK Zimbabwe and TM Pick n Pay, along with poultry sector players, have complained of overlapping charges—such as a US$6,500 annual fee from the Agriculture Marketing Authority (AMA) on top of oversight from the National Biotechnology Authority.

With more than 51 separate tax heads and regulatory costs, Zimbabwe’s effective tax rate is estimated to exceed 40%. Critics say this high burden has forced many businesses into informality. Whether the government can dismantle overlapping licensing fees, local authority levies, and environmental approvals remains to be seen.

Economist Christopher Mugaga, a long-standing critic of the IMTT, said Treasury’s planned adjustment falls short of what is needed.

“The Minister said he will fine-tune the IMTT in November but we want the total removal of the tax as it caused unbearable suffering to businesses and individuals. We have been consistent on the removal of IMTT and we still urge the Minister to do so despite his push to review it. It has done serious damage to the economy hence should be removed in its totality,” Mugaga said.

Zimbabwe Economics Society vice president Misheck Ugaro welcomed the proposed review but said industry must also step up.

“Industry has been calling for this. However, it is also essential to ask industry what they will do in return once that’s done. Will they become export competitive or will they find another angle to cry? Both parties must be answerable to each other,” Ugaro said.