ZIMBABWEANS have for decades been chocked by high taxes. Workers and businesses have bitterly complained about the huge tax burdens, which make doing business in Zimbabwe cumbersome.
But this week, Finance, Economic Development and Investment Promotion minister Mthuli Ncube brought in some welcome relief. He announced a raft of tax reductions and reforms meant to remove unnecessary bureaucratic complexities, which made investing in the economy a nightmare.
Some of the taxes are Pay as You Earn (PAYE), corporate tax, VAT, the Intermediated Money Transfer Tax (IMTT), fuel levies, carbon tax, Aids levy, excise duties, toll fees, vehicle licences, stamp duty, customs duty, capital gains tax, council rates and Nssa contributions among the burdens strangling citizens.
The agriculture sector, which provides livelihoods to nearly two-thirds of the rural population, is one of the biggest beneficiaries.
For years, farmers and processors operated in an environment so heavily regulated that it became almost unworkable. A dairy farmer, for example, previously needed up to 25 permits from 12 different agencies before moving product to market. The government has now scrapped several redundant levies, including the livestock development levy and the cattle levy, while drastically reducing registration fees.
Livestock movement clearance, once pegged at US$10 per beast, now stands at just US$5 per herd. Similarly, farm registration with the Agriculture Marketing Authority has been cut to a token US$1.
Such changes will bring real and immediate relief to farmers, who have long struggled under the weight of unnecessary costs. They also create breathing space for small and medium enterprises, which form the backbone of rural employment.
Reduced fees for importing livestock genetics and exporting dairy or meat products will further strengthen Zimbabwe’s agricultural competitiveness.
- Mbavara eyes to resurrect Matavire’s music legacy
- Zim exiles panic over SA permits
- Zim exiles panic over SA permits
- Social media platforms should act on hate speech
Keep Reading
The transport sector has also seen significant relief. Vehicle number plates, once priced at an astronomical US$500, will now cost just US$50, thanks to local production. The US$500 per licence plate was just ridicoulsy priced and insensitive. If the same can be obtained at US$50, who really was benefitting from such overcharging?
Excessive parking and clamping charges have been halved, while the punitive US$23 000 duty on transit fuel has been scrapped.
These reforms align Zimbabwe with regional standards and should help restore confidence in the country’s transport and logistics industries. The measures are undoubtedly bold, but they are not enough on their own.
Economist Professor Gift Mugano aptly described them as “sweet music”, but cautioned that the score is incomplete. Without addressing deeper structural problems, the reforms risk being a temporary reprieve rather than a genuine turning point.
Zimbabwe’s economy continues to suffer from multiple taxation, overlapping environmental levies, and exorbitant borrowing costs.
Local lending rates of up to 40% in Zimbabwe dollars and 18% in hard currency are choking off investment. Add to this a yawning US$9 billion trade deficit, chronic power shortages, and persistent exchange rate volatility, and it becomes clear that the cost of doing business remains perilously high.
The sheer scale of informality — with roughly 76% of businesses now operating outside the formal economy — is itself a damning indictment.
Entrepreneurs are not evading the state because they want to, but because the system punishes compliance instead of rewarding it. Until government reverses this perverse incentive structure, the formal economy will continue to shrink, tax revenues will dry up, and policy reforms will fail to gain traction.
There are practical steps that can be taken immediately to consolidate the progress made. Removing the IMTT, which has become a burden on every transaction, is one.
Stabilising the power supply and exchange rate, while providing low-interest financing to productive sectors, would go a long way in stimulating growth. These are not utopian demands. Without such decisive action, Zimbabwe risks presiding over the collapse of more companies, more job losses and deepening poverty levels.
The government deserves credit for recognising the urgency of tax and regulatory reform. But this must not be the end of the story. The real challenge now lies in sustaining momentum and tackling the hard choices that will unlock Zimbabwe’s potential.
