Revolt grows against Zimbabwe's punitive tax regime

Zimbabwe's fragile fiscal environment is fast morphing into a full-blown corporate crisis, with major companies publicly condemning government's "highly complex and punitive" tax system and increasingly turning to the courts for relief.

Mining giant Zimplats is the latest heavyweight to sound the alarm. In its annual report for the year ended June 30, 2025, the Australian-listed platinum producer warned that the country's volatile tax regime makes business planning "almost impossible."

"The fiscal environment is volatile, highly complex and subject to interpretation," Zimplats stated, adding that litigation has become unavoidable. The company disclosed that it is already embroiled in several disputes before the Special Court for Income Tax Appeals and the Supreme Court.

Zimplats' frustrations echo those of other corporates, including Delta Corporation, National Foods and Innscor Africa, which have all issued similar warnings. Many now view legal battles with the tax authority as a routine cost of doing business.

At the centre of the row is the Zimbabwe Revenue Authority (Zimra), accused of aggressively and unpredictably interpreting legislation. Companies complain that Zimra collects disputed taxes upfront, even before appeals are resolved.

Delta's latest financials illustrate the scale of the problem. The beverages giant revealed in May that it had paid US$254 million in taxes — a staggering 516% increase in income tax alone. An additional US$74.8 million remains under dispute. If enforced, the company's total liability would balloon to US$329 million.

Delta branded the practice of collecting disputed amounts as "a critical flaw," saying it drains cash flow and forces businesses to bankroll government's legal battles. The company also accused Zimra of "legislating by notice" through public statements that lack enabling legislation.

Consumers are bearing the brunt of the tax chaos. Innscor said a change in VAT status for staples like bread, milk and maize meal had pushed up production costs and retail prices. Delta has blamed sugar taxes for denting sales performance. Formal producers argue the system gives informal traders — who evade taxes — a competitive edge, hollowing out the formal economy.

Economists warn the approach risks killing the very sector government relies on for revenue.

"This is worsened by the 2% Intermediated Money Transfer Tax (IMTT), which should have been scrapped after austerity ended," said Gift Mugano, director of Africa Economic Development Strategies. He noted that the tax burden across long value chains can exceed 30%, forcing businesses into the informal sector.

Economist Farai Chigora said blanket taxes suffocate industry:
"Tax should not be viewed as a punishment. Penalties must not be so severe that they force businesses to shut down. The system should be based on production-related taxes rather than arbitrary figures."

Industry groups are now lobbying for urgent reforms. The Confederation of Zimbabwe Industries (CZI) has urged government to review the IMTT and sugar tax, recommending that the transfer levy be made deductible for businesses and that rates be aligned with regional practice.

But Zimra insists it is simply doing its job. In written responses, the authority told the Zimbabwe Independent:
"Our mandate is guided by enabling tax legislation, which provides for a self-assessment system where taxpayers declare their obligations. Where additional assessments have been issued, it is typically due to incorrect accounting in prescribed currencies."

As companies escalate their resistance, the battle over Zimbabwe's fiscal regime is fast becoming one of the defining challenges to the country's already fragile investment climate.