Zimbabwe scraps VAT on basic goods amid price hike concern

The Zimbabwean government has made revisions to the taxes imposed on essential goods, initially introduced in the 2024 national budget, in response to growing concerns about rising prices.

Minister of Finance, Economic Development, and Investment Promotion, Mthuli Ncube, announced on Monday night that certain basic goods would now be exempted from the 15 percent Value Added Tax (VAT).

Ncube specified that essential food items such as bread, milk, cooking oil, mealie meal, salt, sugar, and flour are now excluded from VAT, aiming to prevent price increases on these items. Additionally, other vital commodities like meat, rice, bath and laundry soap, washing powder, and toothpaste have been moved to a standard rating, anticipating only minimal price adjustments.

To facilitate this process, retailers are permitted to directly purchase from manufacturers if they possess a valid tax clearance certificate and are VAT registered, according to Ncube. These tax adjustments followed the formation of a technical committee by the treasury, tasked with gathering feedback from business entities operating under the Confederation of Zimbabwe Industries.

In a related move last week, the Zimbabwe Revenue Authority, responsible for tax collection and revenue streams, introduced measures allowing only tax-compliant wholesalers to procure directly from manufacturers.