HARARE – Finance minister Mthuli Ncube on Thursday announced a fast food fat tax, a raid on income from betting and new measures to tax small companies as the cash-strapped government turned to even more creative ways to boost revenues.
Punters will see 10 percent of their winning bets withheld as tax, Ncube told MPs in the National Assembly while presenting the 2025 national budget statement.
“Honourable Members would be aware that betting is popular in nature, as indicated by the proliferation of sports betting houses countrywide,” Ncube said.
“Sports betting punters receive income from winnings, which is currently not taxable under personal income tax. To include punters in the tax base, I propose to introduce a 10 percent withholding tax on gross winnings of sports betting punters, with effect from January 1, 2025.”
Ncube announced a reduction to his special surtax on beverages’ sugar content announced in February, but announced new taxes on fast foods to promote healthy living.
He told MPs: “The government, in February 2024, introduced a special surtax of US$0.001/g on added sugar contained in specified beverages. The tax is applied uniformly on both ready to drink and cordials or concentrated beverages.
“Representations from manufacturers indicate that cordials, due to their concentrated nature, have a higher sugar content, hence, attract a higher effective tax as compared to ready-to-drink beverages. Common practice, however, requires that the tax be based on the sugar content of the diluted product.
“In order to create a level playing field between ready-to-drink and cordials, I propose to review the Special Surtax on Beverages’ Sugar Content on cordials from US$0.001/g to US$0.0005/g, with effect from January 1, 2025.”
Ncube said “highly processed food has been identified as one of the factors responsible for the prevalence of obesity and associated non-communicable diseases, hence, the need for government to promote responsible consumption of such foods.”
A fast foods tax of 0.5 percent on the sales value will come into effect from January. The tax will be imposed on sales of pizza; burgers and hot dogs; shawarma; French fries; chicken; doughnuts and similar products; and tacos.
“It is envisaged that the proposed tax will go a long way in encouraging operators to adopt culinary that promote healthy eating,” Ncube said.
The finance minister is also squeezing the informal sector to contribute taxes – from small grocery shops, hardware operators to boutiques.
He said: “A survey into the operations of selected enterprises from the emerging sector shows that a number of operators are engaged in significant economic activities, hence, qualify to contribute to the fiscus through personal and corporate income taxes, as opposed to presumptive tax.
“Notwithstanding that the beneficial owners or directors of such companies can maintain books of accounts, operators deliberately conceal records from the tax administrator, under the pretext that such operators do not have capacity to keep records, which is tantamount to tax avoidance and evasion.”
He said he would be prescribing for mandatory registration for corporate and personal income tax fabric merchandisers; clothing merchandisers/boutiques; spare parts dealers; car dealers; grocery and kitchenware merchandisers; hardware operators and lodges.
“I propose that the above-mentioned operators be mandated to regularise registration of their operations with the Zimbabwe Revenue Authority, transact through point-of-sale machines and maintain records of all transactions by January 1, 2025.”
Ncube said he would empower ZIMRA to temporarily close businesses which fail to adhere to the requirements including failure to register for tax purposes until such registration and payment of applicable taxes are completed.
Small businesses failing to comply will be compelled to pay corporate tax of between US$9,000 up to US$15,000 per quarter in the case of hardware stores.
Individuals who converted residential properties to business properties will now be subject to rental income tax at a rate of 25 percent, he said. Any company or organisation using rented premises will be compelled to disclose to ZIMRA the rental expense, the location and owner of the property for purposes of rental income tax.
Proposing a freeze on government recruitment, Ncube said the 2025 allocation for employment costs of ZiG 152.6 billion or 56.4 percent of revenue was now above the fiscal rule threshold of containing employment costs at maximum of 50 percent of revenue.
“To address this unsustainable position, revenue enhancement measures will be implemented, whilst also limiting the recruitment of additional personnel only to critical sectors such as health and education. The rationalisation exercise will also benefit from the recent Job Evaluation Exercise, which was undertaken by the Public Service Commission, with the aim to have a fit for purpose and professional civil service, with the capacity to deliver quality public services,” he said.
In rare good news, Ncube said he was revising the tax bands following a recent devaluation of the ZiG “to provide relief to taxpayers.”
The new tax-free threshold is ZiG 2,800 per month. Employees earning between ZiG 2,801 and ZiG 8,400 will pay 20 percent tax on income, rising to 40 percent for workers earning more than ZiG 84,000.
The finance minister said revenues during 2025 are expected to top US$7.5 billion against expenditures of US$7.7 billion.
He expects Zimbabwe’s economy to grow by 6 percent in 2024, from 2 percent this year.
Economist Tinashe Murapata poured cold water on Ncube’s growth projects.
“He argues that Zimbabwe will be one of the fastest growing economies in the world and yet at the same time introduces hefty consumer taxes,” Murapata said.
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