Government reduces IMTT on ZiG transactions

Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube at the New Parliament Building ahead of the 2026 National Budget presentation on the 27th of November

By Believe Nyakudjara

The government has reduced the Intermediated Money Transfer Tax (IMTT) on Zimbabwe Gold (ZiG) transactions from 2% to 1.5%. This review aims to lower transaction costs in local currency and promote the use of ZiG in the economy.

The IMTT was introduced in 2018 to widen the tax base, including the informal sector, and help fund public services and infrastructure projects. Since its launch, the ZiG has remained largely stable, bringing down the stubborn inflation from 95.8% in July to 19% now.

This decision to lower the IMTT follows calls from businesses and the ruling Zanu-PF party, which pushed for a review during its recent conference in Mutare to lighten the tax burden on citizens.

However, the Finance Minister Professor Mthuli Ncube announced that the foreign currency IMTT rate remains unchanged at 2%. To offset the impact of the IMTT reduction on revenue, the government has made this tax deductible for income tax purposes.

Presenting the 2026 National Budget at the New Parliament Building in Mt Hampden on the 27^th of November, Finance Minister Professor Mthuli Ncube stated that the new tax rate will take effect on January 1, 2026. He noted the IMTT is a crucial source of revenue, contributing around 8% of total tax revenue annually.

“Reducing the tax on ZiG transactions will promote digital payments and strengthen confidence in our local currency,” said Prof Ncube. He acknowledged that many businesses have requested a review to reduce the burden of local currency transactions.

The government estimates the changes will result in about $89 million in lost revenue per year, hence, a slight increase in Value Added Tax (VAT) from 15% to 15.5% has been proposed to keep overall revenue stable.

Additionally, the new tax-deductible rule for IMTT will help compliant businesses lower their tax bills. To qualify, firms must be registered and up to date with their tax obligations.

Economists believe that the tax reduction will lower operational costs for businesses and promote the wider use of the ZiG in digital payments. However, there are concerns that the VAT increase could offset the benefits for households.

Economist Mr Stevenson Dlamini says the proposed reduction in IMTT and slight increase in VAT should be viewed as a “strategic pivot” rather than a simple tax hike. He argues the shift modernises the fiscal system by “moving from taxing money transfers to taxing consumption”.
Mr Dlamini notes that cutting IMTT reduces the “friction cost” on digital payments, which has discouraged the use of the ZiG in the formal system. However, he says the VAT increase may offset the benefit for households, creating what appears to be a “revenue-neutral” effect. He stresses that the outcome depends on market efficiency.
“If production costs fall from lower IMTT, businesses should pass those savings down the value chain,” he said.
Former ZNCC vice-president Mr Louis Herbst took a cautious stance, warning that IMTT has supported fiscal stability. He argued that VAT “compounds at multiple stages”, raising prices and widening the gap between formal and informal markets.

Ms Gladys Shumbambiri-Mutsopotsi adds that while IMTT is distortionary, higher VAT is regressive and risks eroding purchasing power. She calls for broader tax reform, not a simple shift between the two instruments.

Some experts are calling for broader tax reforms instead of just shifting the burden between IMTT and VAT.