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Zimbabwe Parliament demands removal of punitive taxes
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Parliament has sharply escalated pressure on Treasury to urgently scrap punitive taxes, including the highly contentious 2% Intermediated Money Transfer Tax (IMTT), by August 31, 2025, in a bid to halt the worsening crisis engulfing Zimbabwe's formal business sector.
In a hard-hitting report, the Parliamentary Portfolio Committee on Industry and Commerce, led by Clemence Chiduwa, sounded the alarm over an increasingly suffocating regulatory environment that is driving closures, swelling the informal economy, and pushing the country towards a fragile, cash-dominated system.
The Committee revealed that at least 20 retail and wholesale outlets have shut down since the start of 2025, warning of a "serious corporate graveyard" that threatens jobs, government revenues, and broader economic stability.
Originally introduced to generate revenue, the IMTT has backfired by pushing economic activity underground, adding a heavy cost burden on compliant businesses, and accelerating a public shift away from electronic payments towards cash - thereby undermining financial inclusion and weakening monetary policy.
Chiduwa highlighted the uneven playing field between formal businesses, which face heavy tax and regulatory costs, and the largely unregulated informal sector that enjoys a competitive advantage. He noted that for many formal businesses, taxes and regulatory fees consume more than 5% of their total expenditure, rendering operations increasingly unviable.
The IMTT, Zimbabwe's highest transaction tax in the region, discourages electronic transactions and is not deductible for income tax purposes, compounding financial strain on businesses and distorting the tax system.
The banking sector has reported a sharp decline in transaction volumes as customers seek to avoid the IMTT, with the Bankers Association of Zimbabwe (BAZ) submitting proposals to Treasury advocating for a reduced IMTT rate, imposition only on outbound local currency payments to ease foreign currency shortages, and recognition of IMTT as a deductible expense to alleviate business costs.
Beyond the IMTT, Parliament described Zimbabwe's regulatory framework as an "oppressive maze," citing that operating a single supermarket requires over 30 licenses and permits, many costly and burdened by bureaucratic delays. This environment incentivizes SMEs to remain informal, avoiding compliance costs and undercutting formal businesses.
The flood of statutory instruments - averaging one every 1.43 days in 2024 - further exacerbates confusion and legal uncertainty, stifling investment and business planning.
Parliament has mandated the Ministry of Industry and Commerce to overhaul the registration and licensing systems by September 2025, calling for streamlined processes, elimination of redundant regulations, and a tiered compliance approach to ease informal businesses into formality. The Ministry is also urged to expand e-government services by December 2025 to reduce bureaucratic inefficiencies.
To restore order, the Committee demands consolidation of statutory instruments, repeal of confusing provisions such as those in Statutory Instrument 81A of 2024, and stronger parliamentary oversight to prevent contradictory regulations that harm businesses.
Electricity costs were flagged as another critical challenge, with unreliable power forcing firms to rely on costly generators and solar systems, inflating operational expenses.
Smuggling and counterfeit goods continue to flood the market, severely undermining formal businesses by evading duties and selling at unfairly low prices. The Confederation of Zimbabwe Industries (CZI) warns that such illicit trade results in millions in lost revenue and threatens legitimate operators.
Despite these pressures, Zimbabwe's wholesale and retail sector remains vital, contributing about 18% of GDP in Q1 2024 and consistently ranking among the country's top economic pillars. Yet, ongoing exchange rate volatility, supply chain issues, and regulatory uncertainty have left the sector vulnerable, with widespread fears of further closures and job losses.
With Parliament's August 2025 deadline looming, all eyes are on Treasury and the Ministry of Industry and Commerce. The nation awaits whether bold policy reforms will be enacted to salvage the formal business sector - or if Zimbabwe will face continued economic decline and growing informality.
In a hard-hitting report, the Parliamentary Portfolio Committee on Industry and Commerce, led by Clemence Chiduwa, sounded the alarm over an increasingly suffocating regulatory environment that is driving closures, swelling the informal economy, and pushing the country towards a fragile, cash-dominated system.
The Committee revealed that at least 20 retail and wholesale outlets have shut down since the start of 2025, warning of a "serious corporate graveyard" that threatens jobs, government revenues, and broader economic stability.
Originally introduced to generate revenue, the IMTT has backfired by pushing economic activity underground, adding a heavy cost burden on compliant businesses, and accelerating a public shift away from electronic payments towards cash - thereby undermining financial inclusion and weakening monetary policy.
Chiduwa highlighted the uneven playing field between formal businesses, which face heavy tax and regulatory costs, and the largely unregulated informal sector that enjoys a competitive advantage. He noted that for many formal businesses, taxes and regulatory fees consume more than 5% of their total expenditure, rendering operations increasingly unviable.
The IMTT, Zimbabwe's highest transaction tax in the region, discourages electronic transactions and is not deductible for income tax purposes, compounding financial strain on businesses and distorting the tax system.
The banking sector has reported a sharp decline in transaction volumes as customers seek to avoid the IMTT, with the Bankers Association of Zimbabwe (BAZ) submitting proposals to Treasury advocating for a reduced IMTT rate, imposition only on outbound local currency payments to ease foreign currency shortages, and recognition of IMTT as a deductible expense to alleviate business costs.
Beyond the IMTT, Parliament described Zimbabwe's regulatory framework as an "oppressive maze," citing that operating a single supermarket requires over 30 licenses and permits, many costly and burdened by bureaucratic delays. This environment incentivizes SMEs to remain informal, avoiding compliance costs and undercutting formal businesses.
The flood of statutory instruments - averaging one every 1.43 days in 2024 - further exacerbates confusion and legal uncertainty, stifling investment and business planning.
Parliament has mandated the Ministry of Industry and Commerce to overhaul the registration and licensing systems by September 2025, calling for streamlined processes, elimination of redundant regulations, and a tiered compliance approach to ease informal businesses into formality. The Ministry is also urged to expand e-government services by December 2025 to reduce bureaucratic inefficiencies.
To restore order, the Committee demands consolidation of statutory instruments, repeal of confusing provisions such as those in Statutory Instrument 81A of 2024, and stronger parliamentary oversight to prevent contradictory regulations that harm businesses.
Electricity costs were flagged as another critical challenge, with unreliable power forcing firms to rely on costly generators and solar systems, inflating operational expenses.
Smuggling and counterfeit goods continue to flood the market, severely undermining formal businesses by evading duties and selling at unfairly low prices. The Confederation of Zimbabwe Industries (CZI) warns that such illicit trade results in millions in lost revenue and threatens legitimate operators.
Despite these pressures, Zimbabwe's wholesale and retail sector remains vital, contributing about 18% of GDP in Q1 2024 and consistently ranking among the country's top economic pillars. Yet, ongoing exchange rate volatility, supply chain issues, and regulatory uncertainty have left the sector vulnerable, with widespread fears of further closures and job losses.
With Parliament's August 2025 deadline looming, all eyes are on Treasury and the Ministry of Industry and Commerce. The nation awaits whether bold policy reforms will be enacted to salvage the formal business sector - or if Zimbabwe will face continued economic decline and growing informality.
Source - Business Times
