Harare, (New Ziana) – Zimbabwe is set to strengthen the integration of the informal economy into the national tax system by linking the renewal of local authority vendor licences to compliance with presumptive tax obligations administered by the Zimbabwe Revenue Authority (ZIMRA).
Finance, Economic Development and Investment Promotion Minister, Prof. Mthuli Ncube said Government is proposing that local authorities and ZIMRA integrate their registration and payment systems, enabling the two institutions to share information on vendors and small businesses. Under the proposed arrangement, tax compliance would become a prerequisite for the renewal of operating licences.
The proposal forms part of Treasury’s broader strategy to widen Zimbabwe’s tax base by capturing revenue from the country’s vast informal sector, reducing reliance on formal businesses, salaried employees and established companies, which currently contribute the bulk of Government revenue.
“The proposed reform underscores Treasury’s increasing focus on economic activity that is already visible to local authorities but remains outside the formal national tax system. Councils maintain records of traders operating from markets, stalls, shops and designated vending sites, including their names, business locations, business categories, licence histories and renewal dates. ZIMRA, meanwhile, administers presumptive taxes through a separate system.
“Integrating these databases would enable Government to use existing municipal records to identify businesses, assign them to the appropriate tax categories, record tax payments and verify compliance during licence renewals. Rather than relying primarily on costly inspections to identify informal businesses, the annual licensing process would become an effective mechanism for tax registration and ongoing compliance,” Ncube said.
According to Ncube, the proposed reforms could also address long-standing concerns raised by Zimbabwe’s formal private sector, whose registered businesses are subject to a broader range of taxes and regulatory obligations, including Corporate Income Tax, Value Added Tax (VAT), Pay As You Earn (PAYE), withholding taxes and other statutory levies.
He said broadening the taxpayer base would enable Treasury to generate additional revenue from a wider segment of economic activity instead of placing increasing pressure on businesses and consumers, who are already part of the formal tax system.
ZIMRA collected ZiG137.8 billion in taxes, equivalent to approximately US$5.15 billion, during the first half of 2026, surpassing its revenue target of ZiG124.4 billion by ZiG13.4 billion, representing an over-performance of 10.8 percent.
Value Added Tax (VAT) remained the largest contributor to tax revenue, accounting for 28 percent of total collections. Personal Income Tax contributed 17 percent, followed by Corporate Income Tax at 14 percent, Excise Duty at eight percent, and the Intermediated Money Transfer Tax (IMTT) at six percent.
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