Zimbabwe Plans Measures to Curb Informal Sector Growth

The Zimbabwean government, led by Finance Minister Mthuli Ncube, is set to implement measures aimed at formalizing the informal sector, which has been undermining formal businesses by offering lower prices due to non-compliance with regulations. The measures include enforcing tax compliance, reducing the VAT registration threshold, and implementing a 5% withholding tax on unregistered micro and small enterprises. Additionally, the Zimbabwe Revenue Authority has intensified operations against smuggling, seizing goods worth approximately US$2.4 million to support formal retailers facing fierce competition. The government is also exploring recommendations from the Zimbabwe National Chamber of Commerce to streamline taxes and create incentives for informal traders to formalize their operations. Ncube emphasized the necessity of compliance to restore fair competition and stabilize the retail sector. The push for formalization comes in response to an economic slowdown and increasing informalization within the economy, particularly in retail and wholesale sectors.