By Daniel Chigundu
Finance Economic Development and Investment Promotion Minister, Mthuli Ncube, has unveiled an ambitious revenue mobilisation strategy for the 2025 fiscal year. The goal is to generate about ZiG103.17 billion while focusing on broadening the tax base and limiting the budget deficit to under 3% of GDP.
A key aspect of Minister Ncube’s strategy is to tap into the country’s growing informal sector, which primarily consists of vendors and small businesses. Many of these enterprises do not contribute to government revenues because they are not registered and operate on a cash basis, making it difficult for the Zimbabwe Revenue Authority (ZIMRA) to track and tax.
To address this challenge, the 2025 Budget Strategy Paper proposes the “automatic registration of qualifying micro, small and medium enterprises (MSMEs) for Value Added Tax (VAT), Pay As You Earn (PAYE), Corporate Income Tax (CIT), among other revenue heads in all economic sectors.”
However, the feasibility of this initiative remains uncertain, given the Ministry of Small to Medium Enterprises’ failure to successfully formalise these businesses. Many SMEs are hesitant to register, fearing the burden of unsustainable taxes.
In addition to targeting the informal sector, Ncube plans to improve tax collection and administration through digital technology. This involves integrating ZIMRA‘s systems with those of various government agencies and institutions, such as banks, the Central Vehicle Registry, the Civil Registry, the Zimbabwe National Roads Administration (ZINARA), and the Procurement Regulatory Authority of Zimbabwe (PRAZ).
This integration aims to address the lack of coordination that has hindered effective revenue collection, which has resulted in alleged substantial illicit financial flows at a cost of billions of U.S. dollars for the country.
Apart from the integration of government systems, the treasury will also focus on collecting revenue from online transactions conducted across borders ‘’through incorporating cross-border online transactions into the tax net.’’
Many Zimbabweans engage in buying and selling, often traveling to neighbouring countries like South Africa to purchase goods. Some of them resort to online transactions due to cash limitations at the country’s ports of entry. These transactions will now be targeted for taxation in the 2025 budget.
Furthermore, the Treasury aims to increase contributions from Zimbabwe’s extractive sector by streamlining tax expenditures. One step the government has already taken is excluding the mining sector from Special Economic Zone incentives. This is intended to ensure a fair share of revenue from Zimbabwe’s finite resources and enhance their contribution to the national budget.
Diaspora Remittance Contribuion
In addition, the Minister of Finance, Economic Development, and Investment Promotion is exploring the potential of tapping into remittances from Zimbabweans in the diaspora by offering various incentives.
“‘’Increased engagement with the diaspora community is critical for sustainable national development and investment, with remittances from Zimbabweans abroad amounting to US$2.16 billion in 2023.
‘’In 2025, the national budget will prioritise initiatives aimed at fostering closer ties with the diaspora community, including policies to facilitate efficient investment channels that address their peculiarities and aspirations, knowledge transfer programs, as well as incentives for remittances through formal channels,’’ the 2025 Budget Strategy Paper says.
Although the exact number of Zimbabweans in the diaspora is unknown, estimates suggest that it could be close to a million or two, with the majority residing in South Africa, Botswana, the United Kingdom, and various other countries.
Mthuli lays out 2025 revenue mobilisation strategies targeting ZiG103.17 billion
through incorporating cross-border online transactions into the tax net.’’
