Zimbabwe proposes linking vendor licenses to tax compliance

Zimbabwe's Finance Minister, Professor Mthuli Ncube, has proposed linking the renewal of local authority vendor licenses to tax compliance. The initiative aims to integrate the informal economy into the national tax system by requiring small traders and SMEs to demonstrate compliance with presumptive tax requirements administered by the Zimbabwe Revenue Authority (ZIMRA) before their operating licenses are renewed.

To implement this, the government plans to utilize integrated digital platforms to allow local councils and ZIMRA to share registration and payment information. This approach seeks to broaden the country's tax base, which currently relies heavily on formal companies and employees. During the first half of 2026, Zimbabwe collected approximately US$5.15 billion, exceeding its target by 10.8%.

Minister Ncube argued that because many SMEs are already licensed and regulated by local authorities, they should no longer be categorized as informal businesses. The proposal also aims to alleviate the tax burden on the formal private sector by ensuring that small-scale traders contribute to national revenue. However, critics have raised concerns that the move could place additional financial and administrative pressure on vulnerable traders already facing rising operating costs.