ZIMBABWE Stock Exchange Holdings (ZSE Holdings) chief executive officer Justin Bgoni (pictured) says the proposed increase in Value-Added Tax (VAT) will weigh on the capital markets at a time when the sector is working to attract investors and roll out the Zimbabwe Entrepreneurship Exchange (ZEEX).
From next year, VAT is expected to rise to 15,5% from the current 15%, as government seeks to raise an additional US$1,47 billion in 2026. Treasury is targeting total revenue of US$9,4 billion for next year.
The proposal is part of a raft of new taxes announced in the 2026 National Budget, measures that have drawn widespread criticism from economists and business bodies, who argue that Zimbabwe’s tax burden is already excessively high.
The VAT adjustment comes just as the Zimbabwe Stock Exchange and the Victoria Falls Stock Exchange (VFEX) were beginning to register a modest rebound in the second half of the year, following subdued activity in 2023.
“To our understanding, this is a proposal, and the proposed VAT increase will need to be approved,” Bgoni said in an interview with businessdigest.
“This will not only affect the capital markets, but all sectors. However, we can only know the impact once it has been effected.”
In another key development for the capital markets, Statutory Instrument 110 of 2024 had set the Capital Gains Withholding Tax (CGWT) on listed marketable securities at 2%.
However, following engagements between the market and government, the tax was reduced to 1% through the Finance (No. 2) Act, Act No. 7 of 2024, effective January 1, 2025.
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“The reduction was implemented through the Finance (No. 2) Act, Act No. 7 of 2024, which reduced it from 2% to the current 1%. This has helped to enhance market activity,” Bgoni said.
“Together with other market players, we will continue to lobby for reduced transaction costs to remain a competitive market and attract foreign investors.”
The renewed activity on the bourse is one of the reasons ZSE Holdings is pushing ahead with the creation of ZEEX, a platform designed to broaden participation in capital markets.
ZEEX will introduce three listing tiers tailored for small businesses, with entry thresholds ranging from US$50 000 to above US$1 million, targeting Zimbabwe’s vast but underserved SME sector.
