Online Reporter
Sikhulekelani Moyo Zimpapers Business Hub
CAPTAINS of industry and commerce have renewed calls for Government to reduce the cost of doing business, warning that the high tax burden and compliance costs are stifling formalisation and undermining the competitiveness of local goods and services.
The concerns come in the wake of the Finance Bill being enacted with effect from January 1, 2026, introducing new taxes proposed in the 2026 National Budget.
In an interview, Zimbabwe National Chamber of Commerce (ZNCC) chief executive officer Mr Christopher Mugaga said the private sector remained worried about the prevailing levels of taxation and administrative requirements.
“The private sector is concerned given the levels of taxation that are currently obtaining,” said Mr Mugaga.
He said the introduction of the digital services tax would be particularly challenging during the first half of the year as businesses are forced to adjust their internal tax policies and systems.
“You look at the requirement for tax clearance certificates and inter-facility transfers (ITF) to be presented every quarter — every three months — that is a very serious burden,” he said.
“Given the headwinds in the economy, businesses should not be overwhelmed by administrative headaches. As ZNCC, we continue lobbying for the Zimbabwe Revenue Authority to at least move ITF or tax clearance requirements to six months. A year would be ideal, but six months would be far better than the current three months.”
Mr Mugaga also raised concern over the increase in Value Added Tax (VAT) from 15 percent to 15.5 percent, saying the ultimate burden would be borne by consumers.
“Unfortunately, it is the ordinary person who is going to suffer. Companies withhold VAT on behalf of the tax authority, and this comes at a cost, at a time when consumer spending is already weak,” he said.
He questioned the feasibility of Government’s push for a 24-hour economy, arguing that higher taxes undermine consumer demand.
“The Treasury has been talking about a 24-hour economy, but if consumer spending is weakened, that objective cannot be achieved,” said Mr Mugaga.
“It is sad because businesses are trying to avoid passing the burden to consumers, but our options are limited. VAT has to be paid.”
Mr Mugaga said there was need for more meaningful tax relief measures, adding that while the national budget occasionally introduces incentives, they are often outweighed by compliance costs.
“If you conduct a cost-benefit analysis between tax levels and the administrative formalities required to comply, the compliance cost alone is significant,” he said.
“Before you even worry about the tax itself, the paperwork and administrative processes pose a serious threat to business viability.”
He expressed hope that Government would reconsider some measures during the mid-term budget review, particularly the VAT increase.
“We understand that the law has already been implemented, but we hope that the mid-term budget review will push VAT back to at least 15 percent, given the already low consumer demand in the economy,” he said.
Late last year, Government scrapped 11 licence requirements and consolidated fragmented local authority permits into a single unitary licence as part of broader ease-of-doing-business reforms.
The initiative was aimed at simplifying regulatory processes for small and medium enterprises (SMEs) and formal businesses operating multiple lines under one roof, such as bakeries, butcheries, restaurants, takeaways and food factories.
Previously, some businesses were paying as much as US$2 300 for a food factory licence alone.
