Business Reporter
Zimbabwe’s strong Value Added Tax (VAT) collections are being driven more by high product prices and business margins than by excessive tax rates, Secretary for Finance, Economic Development and Investment Promotion, George Guvamatanga, has said.
Speaking at the 2026 Mid-Term National Budget Breakfast Forum in Harare, Guvamatanga dismissed perceptions that Zimbabwe’s VAT regime is among the highest in the region, arguing that the country’s tax rate remains broadly in line with neighbouring economies.
He noted that Zimbabwe’s VAT rate stands at 15.5 percent, compared to 18 percent in Uganda and Tanzania, 17.5 percent in Malawi, 16 percent in Kenya and Zambia, and 15 percent in Namibia.
Guvamatanga said the prominence of VAT in Zimbabwe’s overall tax revenue basket is largely a reflection of elevated prices and profit margins in the domestic market.
“Zimbabwe is among the countries with the lowest VAT rates in the region, but our VAT collections appear higher because the prices of goods are higher,” he told business leaders, economists and policymakers attending the forum.
The Treasury Secretary argued that businesses are earning significantly higher margins on similar products than their counterparts in neighbouring countries, resulting in a larger VAT contribution per transaction despite comparable tax rates.
Using a regional comparison, Guvamatanga said a similar product sold in South Africa would generate substantially less VAT revenue than in Zimbabwe because of lower selling prices.
He challenged the private sector to address pricing structures and improve competitiveness, saying lower prices would ultimately reduce the relative contribution of VAT to total government revenue while easing the burden on consumers.
The remarks come amid growing debate over Zimbabwe’s tax structure, cost of doing business and the high prices of goods and services, with industry players calling for measures to stimulate production and improve affordability.
Analysts say Guvamatanga’s comments shift attention from tax policy to market pricing dynamics, highlighting the role of business costs and profit margins in shaping consumer prices and government revenue performance.
