'Lowering IMTT Requires Raising VAT'

'Lowering IMTT Requires Raising VAT' — Prof Ncube

Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube has warned that reducing the Intermediated Money Transfer Tax would require an equivalent rise in Value Added Tax to prevent a revenue shortfall.

Addressing Parliamentarians at the ongoing Pre-Budget Seminar for the 2026 National Budget at the Zimbabwe International Exhibition Centre in Bulawayo on Thursday, Prof Ncube said the IMTT, commonly known as the 2% tax on electronic transactions, remains a key source of government funding.

"If we are to lower the IMTT by half a percent, then VAT will have to be raised by the same margin,” said Ncube. “This revenue is essential to keep government operations running and sustain critical national programmes.”

The minister’s remarks come amid mounting pressure, including from the ruling ZANU PF, for government to scrap the IMTT, which has drawn criticism for increasing the cost of doing business and burdening consumers.

Ncube defended the levy, saying it has played a pivotal role in funding major national priorities such as infrastructure development and COVID-19 vaccine procurement during the pandemic.

According to Treasury data, the IMTT contributed about 8% of total tax collections by the end of 2024, making it one of Zimbabwe’s top revenue streams.

Prof Ncube said while he acknowledged the public concerns, removing the tax without a compensatory measure would “create a serious fiscal gap,” threatening ongoing projects under the National Development Strategy and preparations for NDS2 (2026–2030).

Earlier in his presentation, the minister outlined the performance of the 2025 National Budget, noting that despite economic headwinds, Zimbabwe has achieved “domestic currency stability for the first time since 2003,” with the ZiG maintaining strength at USD1 to ZiG26.7, below the projected ZiG36 rate.

The Pre-Budget Seminar, which runs until November 9 under the theme “Enhancing Drivers of Economic Growth and Transformation Towards Vision 2030,” brings together legislators, ministers, senior government officials, and economic experts to shape the country’s 2026 fiscal roadmap.