THE escalating tax burden is severely straining formal businesses in Zimbabwe, causing financial distress and eroding competitiveness, according to Jephias Makiwa, principal economist at the Zimbabwe National Chamber of Commerce (ZNCC).
Imara Asset Management recently reported that the tax system disproportionately impacts formal businesses, particularly large companies such as Delta Corporation Limited and Econet Wireless Zimbabwe, which face multiple tax obligations.
Delta alone is projected to pay at least US$250 million in taxes by the end of its financial year on March 31, 2025, largely due to the introduction of new taxes.
Taxes such as excise duties, levies, the sugar tax, and the Intermediated Money Transfer Tax (IMTT) are among those most criticised by businesses.
The Confederation of Zimbabwe Retailers disclosed last week that prominent retailers such as Choppies Zimbabwe, N. Richards, and Spar Zimbabwe are under significant financial strain, partly due to high taxation.
Makiwa told businessdigest that the tax regime had become unsustainable for compliant businesses.
“The current tax regime in Zimbabwe places a significant burden on large corporations, which are largely compliant relative to small and medium enterprises,” he said.
“Taxes such as the IMTT, corporate tax rates (25%), and licence fees are straining compliant businesses exacerbated by the unstable operating environment.
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“High tax heads coupled with high regulatory complexity create operational challenges for businesses like Delta and Econet, which are already grappling with limited access to foreign exchange, unstable local currency, and high inflation.
“While tax revenue is essential for public services, the government’s current policies seem to prioritise short-term fiscal needs over long-term private sector sustainability,” Makiwa said.
He said the private sector, particularly large corporations, needed a predictable and fair tax environment to thrive.
A Zimbabwe National Statistics Agency survey on the third quarter of 2024 revealed widespread dissatisfaction with the overall business climate, with fewer than 50% of respondents across most sectors rating conditions as satisfactory.
The exception was the financial and insurance sector, which recorded a 62,5% satisfaction rate.
The 2024 ZNCC Annual State of Industry and Commerce Survey proposed several measures to mitigate the adverse effects of high taxes. These include enhancing operational efficiency, adopting technological innovations, and diversifying into less-taxed or incentivised sectors.
Makiwa said companies such as Econet, Delta, and Seed Co had already adopted such strategies, expanding their operations regionally to offset the challenges of the local tax environment.
He also emphasised the importance of industry collaborations.
“Passing some costs to consumers were possible without undermining competitiveness. In similar contexts, public-private dialogue and partnerships have been instrumental in finding a balance between revenue generation and economic sustainability,” he noted.
In its 2025 market outlook, Fincent Securities said Zimbabwe’s heavy tax burdens have earned the country the unenviable position of second-to-last in Sub-Saharan Africa for effectively using taxes to improve citizen well-being.
“Despite the growing fiscal demands on its population, the government’s limited reinvestment into essential services and public welfare continues to undermine trust and economic progress,” it said.
In December 2024, the Institute of Chartered Accountants of Zimbabwe called on the government to focus on debt reduction initiatives and progressive tax reforms to avoid exerting pressure on struggling taxpayers.
American financial and economic website Investopedia notes that a progressive tax involves a tax rate that increases or progresses as taxable income increases.
Despite mounting pressure, Finance, Economic Development, and Investment Promotion minister Mthuli Ncube dismissed claims that businesses were struggling due to macroeconomic challenges such as high taxes. His 2025 National Budget introduced several new taxes, including levies on plastic bags, betting, rental income, fast food, and a reinstated duty on selected medical products.
These taxes, which came into effect this month, were aimed at bolstering government revenues but have instead exacerbated the plight of formal businesses.
