Online Reporter
Business Writer
The Treasury yesterday proposed a steep new progressive levy on foreign currency cash withdrawals, a measure immediately met with consternation from the financial sector and labelled as a move that “discourages banking.”
Presenting the 2026 National Budget Statement in Parliament, Finance, Economic Development and Investment Promotion Minister Mthuli Ncube proposed the tiered tax structure on US dollar withdrawals, which he argued was imperative to combat widespread tax evasion, curb informality, and compel the economy towards digital payment platforms.
The minister noted that the widespread reliance on physical US dollar cash — which accounts for over 90 percent of all physical cash transactions — “undermines transparency, reduces traceability of transactions and significantly limits the effectiveness of tax administration.”
While local currency transactions will remain exempt, the new progressive rates will target high-volume US dollar withdrawals from banks.
The proposed Cash Withdrawal Levy introduces a progressive tax on foreign currency (US$) withdrawals, with different thresholds for individuals and corporates.
For Individuals: There will be no levy (0 percent) on monthly US dollar withdrawals between US$1 and US$500.
A 2 percent tax rate will be applied to amounts withdrawn between US$501 and US$1 000. Any amounts withdrawn above US$1 001 will be subject to a 3 percent levy.
Cash withdrawals already attract a 3 percent charge from banks.
Corporates will also pay no levy (0 percent) on monthly US dollar withdrawals up to US$5 000. A 2 percent tax rate will apply to withdrawals ranging from US$5 001 to US$10 000. Finally, any corporate withdrawals exceeding US$10 000 per month will be taxed at the highest rate of 3 percent.
Minister Ncube cited alarming data on cash usage, noting that ATM withdrawals averaged approximately US$265,8 million per month between April 2024 and June 2025, with over 90 percent of this being in United States dollars.
Withdrawals reached a peak of US$353 million in June 2025, placing significant pressure on banks, which must maintain nearly US$1 billion in cash and Nostro balances to meet demand.
The Government contends that the “continued increase in cash withdrawals . . . heightens risks of informality, tax evasion, corruption and administrative inefficiencies.”
However, the move to tax withdrawals was met with sharp criticism. A senior banker, who requested anonymity due to the sensitivity of the issue, said the measure is counterproductive. The source stated simply: “Discourages banking. Another shocker.”
“This tax is entirely counterproductive. It simply punishes customers for using their own money and will inevitably drive the very transactions the minister wants to formalise straight back into mattresses and the black market,” said the banker.
