The gruelling tax measures introduced by Finance Minister Mthuli Ncube in his latest 2025 National Budget have spilt over to parliament following concerns raised by Industry hinting the interventions are set to destroy whatever is left of the formal sector.
Rattled by the endless piling up of taxes on the industry, which experts warn may diminish the little gains of what remains in the delicate formal sector, Business Member Organisations (BMOs) concerns exposed grave inconsistencies in the National Budget Blueprint requiring urgent redress.
A Non-Adverse Report received by the Parliamentary Legal Committee contains several concerns raised by Industry.
For instance, the Confederation of Zimbabwe Industries (CZI) says with the reduction of the degree of export orientation from 100% to 80% for manufacturing companies under SEZ it will be difficult to penetrate the export market due to high production costs.
"We are of the view that the 25% tax on rental income is too high as there are other costs to be met by rental income collections, like renovations, maintenance costs among others. The proposal is to ensure that the tax is applied on net rental income as opposed to gross revenue from rentals," the industry lobby group said.
CZI further submitted that IMTT taxes the whole value chain resulting in up to 10% additional costs to products leaving local products priced relatively higher than regional products.
The Confederation of Zimbabwe Retailers (CZR) CZR proposed the removal of tax on fast foods and betting tax which seem to target the poor.
"There are a number of taxes charged on the purchase of food such as VAT, IMTT and the proposed fast-food tax which further burdens the poor. Such taxes need stakeholder consultations before they are introduced," the retailers group said.
The Chamber of Mines noted that the 2025 National Budget Statement was announced at a time when the mining industry is operating below its potential on the back of a challenging environment characterised by weak commodity prices, foreign currency shortfalls, capital shortages and fragile power supply.
Coupled with a high-cost structure on the backdrop of high royalties and taxes, high electricity tariff, exchange rate losses and high cost of funding mining projects, the viability of mining companies has been severely compromised. These challenges have combined to weigh down on the performance of the mining industry with mineral revenue coming down significantly and mining companies struggling to meet their production targets.
"The proposal to extend the royalty on coal to all types of coal, including coking and industrial coal, will increase production costs in the energy sector. This extension translates into higher operational expenses, impacting various downstream industries. Specifically, the cost of generating thermal power is likely to rise, as this additional cost will be passed down to Zimbabwe Power Company (ZPC)," the miners group said.
The grouping contends that the agriculture industry, particularly the tobacco sector, will be directly affected by the increased cost of industrial coal used for tobacco curing.
Miners also expressed dissatisfaction over Ncube's policy to the effect that minerals will be deemed sold at the value determined on either the date the sales contract is entered or the date on which the purchaser receives the product, whichever is higher.
"The proposed measure may lead to disputes between ZIMRA and taxpayers, as during periods of price declines, ZIMRA may require miners to pay royalties on unrealised cash proceeds," the Chamber of Mines said.
Miners also contested the 20% Capital Gains Tax as too high and way beyond the regional averages. They were of the view that the tax must not be applied in retrospect and that the rate be maintained at 5% as effected in 2017.
Royalty for platinum is high at 7%, the Chamber of Mines recommends a commodity price-linked royalty framework for platinum as follows: a base royalty of 3 % for the platinum price of up to US$1,100 / ounce, a royalty rate of 5% for a platinum price between US$1,100 /ounce and US$1,400, a royalty rate of 7% for platinum price between US$1,400/ounce and US$2,000/ounce and a royalty of 10% for platinum price above US$2,000 ounce.
"Royalty for diamonds at 10% is also impacting negatively on the viability of diamond projects. Producers of alluvial diamonds which are predominantly low quality are the most affected as their prices have taken a huge knock," the report reads.