IN 2025, many Zimbabwean businesses woke up to find the rope had tightened — not suddenly, but slowly, loop by loop, until breathing became harder.
For years, firms had learned to live with exchange-rate volatility, power cuts and policy inconsistencies — familiar enemies, predictable in their unpredictability.
This year, however, taxes joined the struggle. What was once a heavy burden has increasingly become a noose, quietly choking already strained enterprises and turning survival, rather than growth, into the dominant business strategy. The strain is evident in company performance.
Between January and September, 59% of firms recorded either a decline in profits or no change at all, underscoring how rising statutory costs are compounding existing economic pressures across the formal sector.
“The survey results indicate that nearly half of the respondents (44%) reported a decrease in profitability during the first nine months of 2025 as compared to the same period in 2024,” the Confederation of Zimbabwe Industries (CZI) said in its new 2025 Third Quarter Business Insights report.
“Approximately 41% registered an increase, while 15% indicated that their profit remained the same.”
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The tax burden has become so pronounced that even turnover is shrinking, as taxation increasingly feeds directly into costs.
CZI reports that 53% of firms recorded either a decline in turnover or no change at all.
“Comparing the first nine months of 2025 to the same period in 2024, the survey results show that there was an overall increase in turnover by an average of 2,4% across all the respondents,” CZI said.
“The survey results also show that close to half (47%) of the businesses registered an increase in their turnover. About 42% registered a decrease while 11% had their turnover remaining the same.”
The impact of rising taxes is evident even among the country’s corporate heavyweights.
Delta Corporation Limited, Zimbabwe’s largest listed company by market capitalisation on the Zimbabwe Stock Exchange, was saddled with a tax burden of US$220,52 million in the half-year ended September 30, 2025 — a 37,22% increase on the comparative period.
Innscor Africa Limited, in its financial year ended June 30, 2025, experienced a near 122% surge in taxes to US$105,44 million. That figure rises further when Innscor’s uncertain tax bill of US$13,39 million is factored in.
Despite this, Treasury has introduced a fresh slew of taxes for 2026.
The 2026 national budget ushers in a raft of new and higher taxes set to raise the cost of doing business further, reinforcing what IH Securities describes as an increasingly punitive tax environment.
Key measures include a 0,5 percentage-point increase in VAT to 15,5%; the introduction of a 15% digital services withholding tax on offshore platforms; a tiered gold royalty regime ranging from 3% to 10%; and a tiered lithium export tax set at 10% on ore and concentrate.
While the Intermediated Money Transfer Tax (IMTT) on ZiG transactions is reduced to 1,5% from 2%, it remains unchanged at 2% on US dollar transfers, an adjustment largely aimed at incentivising ZiG usage rather than easing the overall tax burden.
Additional measures include sharply higher customs duty on cotton, signalling that 2026 will see businesses face even heavier statutory costs as Treasury seeks to raise US$1,47 billion in additional revenue.
This is anchored on plans to collect total revenues of US$9,4 billion in 2026, up from an expected US$7,93 billion this year.
“The new taxes proposed in the 2026 national budget risk deepening pressure on an already fragile business environment,” one analyst said.
“Higher consumption taxes, expanded sector-specific levies and unchanged charges on US dollar transactions raise operating costs without offering meaningful relief.
“While measures such as the reduction in ZiG IMTT appear supportive on the surface, the broader thrust of policy points to revenue maximisation rather than growth stimulation, potentially squeezing margins, dampening investment appetite and reinforcing concerns that taxation is increasingly being used as a fiscal stopgap rather than a tool for economic expansion.”
BancABC Zimbabwe microfinance subsidiary BancEasy managing director and economist James Wadi said a lower tax regime could, paradoxically, improve compliance — reducing the need for ever-higher taxes.
“Zimbabwe’s tax revenue as a percentage of GDP has declined markedly from peak levels above 25% around 2012 to current levels of about 16%,” Wadi said.
“This may reflect increased informalisation and rising non-compliance.”
He noted that Mauritius, with a 15% corporate income tax (CIT), Botswana at 22% and Egypt at 22,5% have significantly lower CIT rates than Zimbabwe’s 25%.
“Mauritius, with the lowest CIT, VAT and personal taxes, is among the highest in tax-to-GDP ratios, showing that a low-tax regime can encourage compliance,” Wadi said.
“Mozambique has the highest corporate tax rate at 32%.”
He added that South Africa, Mauritius and Namibia have relatively smaller informal sectors, while Zimbabwe, Uganda, Senegal and the Democratic Republic of Congo feature among countries with maximum personal income tax rates of 40% or higher.
The Zimbabwe National Chamber of Commerce (ZNCC) says the policy choice for 2026 is stark.
“Raising taxes risks choking already fragile businesses and formalisation efforts,” ZNCC said.
“Cutting waste and tightening expenditure management is necessary, but it must be done transparently, swiftly and in ways that protect growth-critical capital spending.”
ZNCC said the budget once again raises the perennial question of whether revenue should be increased or expenditures cut.
“Given that tax revenue accounts for 96% of total revenue and the formal tax base is narrow, raising rates or introducing new taxes risks reducing competitiveness, discouraging investment and exacerbating informality,” the chamber said.
“The alternative — cost containment, stronger public financial management amid excessive unverified expenditures, and recovery of leakages — is preferable. The 2026 budget should prioritise expenditure rationalisation, procurement reform and tax-base broadening measures such as digitalisation, e-invoicing and better integration of bank and mobile money data with Zimra.”