Banks ditch court fight against ZIMRA, Treasury

Zimbabwe's banking sector has abandoned plans for a courtroom showdown with the tax authorities, opting instead for direct negotiations with the Zimbabwe Revenue Authority and the Ministry of Finance in a bid to resolve a long-running dispute over tax treatment of interest expenses.

The shift involves major lenders operating under the Bankers Association of Zimbabwe, which had previously signalled readiness to challenge tax assessments in court.

At the centre of the dispute is how interest expenses are treated in taxable income calculations, with banks arguing that recent retrospective assessments covering the 2019–2025 period have significantly inflated their tax liabilities and distorted financial positions.

However, the association confirmed that the matter is now being addressed through structured engagement rather than litigation.

"We advise that the deductibility of interest expense issue was addressed in the 2026 National Budget," BAZ said, adding that discussions are now focused on the implementation timeline.

The association said it is engaging both ZIMRA and the Treasury to ensure a "managed transition" that provides clarity to the financial sector.

Individual institutions have also confirmed participation in the talks.

FBC Holdings chief executive Trynos Kufazvinei described the process as a constructive step toward resolving complex tax issues, saying it allows for "mutually beneficial outcomes within an established consultative framework."

Similarly, CBZ Holdings CEO Lawrence Nyazema said legal proceedings had been temporarily suspended to allow negotiations, though he noted the process has been slower than expected.

The dispute has its roots in differing interpretations of Zimbabwe's Income Tax Act. ZIMRA argues for a stricter application of deductible expense rules, while banks insist the current approach undermines long-standing practice and weakens policy predictability in the financial sector.

Adding weight to the government's position, Finance Ministry Permanent Secretary George Guvamatanga has urged businesses to prioritise administrative dialogue over litigation in resolving tax disputes.

He said many cases stem from inconsistencies between currencies used in transactions and tax remittances, arguing that the legal framework already provides clarity and has been upheld in previous court rulings.

The Treasury maintains that most disputes arise from companies collecting revenue in US dollars while remitting taxes in local currency — an issue it says has already been largely clarified through legal precedent.

With negotiations now underway, both sides appear to be seeking a pragmatic resolution to avoid prolonged litigation that could unsettle the financial sector.