Zimbabwe will reduce the intermediated money transfer tax (IMTT) on domestic currency-based electronic transactions from 2 per cent to 1.5 per cent beginning January 2026. The announcement was made by Finance and Economic Development Minister Mthuli Ncube during his presentation of the 2026 National Budget in Parliament in Harare. The measure applies specifically to transactions conducted in Zimbabwe Gold (ZiG), the country’s local currency introduced earlier this year. The levy on foreign currency-based digital transactions, however, will remain unchanged at 2 per cent.
The IMTT was introduced as a digital tax to capture revenue from informal and digital economies, which have grown substantially in recent years. It applies to all forms of electronic money movement including mobile money, bank transfers and point-of-sale payments. The downward revision of the tax rate on ZiG-denominated transactions is framed by government as an incentive to promote broader domestic adoption of the currency. In contrast, the continued application of the full rate to foreign currency transactions is viewed as a means to preserve revenue from the larger dollar-based economy while encouraging a gradual rebalancing of currency preference in favour of the local unit.
To compensate for the reduction in revenue expected from this tax cut, the Value Added Tax (VAT) will be increased by 0.5 percentage points, bringing it to 15.5 per cent. This adjustment is to take effect on 1 January 2026. While such a shift redistributes the tax burden, government officials have stated that it is part of a broader revenue-neutral approach to economic reform. This trade-off illustrates an attempt to strike a balance between supporting monetary policy objectives and safeguarding public revenue.
The changes form part of a suite of policy measures embedded in the National Development Strategy 2 (2026–2030), officially launched by President Emmerson Mnangagwa on 27 November 2025. The strategy builds on the first iteration (NDS1) and outlines key national objectives intended to guide Zimbabwe’s socio-economic development through the end of the decade. At the core of NDS2 are ten priority pillars including economic transformation, infrastructure modernisation, innovation-driven human capital development, and financial sector deepening .
The adjustment of the IMTT rate aligns with the NDS2 objective to strengthen domestic resource mobilisation while deepening financial inclusion. By lowering the cost of transacting in the local currency, authorities are attempting to normalise its usage in daily commerce and restore monetary sovereignty without issuing outright bans or capital controls. This approach recognises that trust in the local currency cannot be legislated into existence but must be incentivised through policies that reduce friction and risk in its use.
Zimbabwe continues to operate within a multi-currency system where both the US dollar and ZiG are legal tender. However, the dollar continues to dominate in both retail and institutional transactions due to historical volatility in domestic currencies and persistent inflation expectations. Previous attempts to enforce local currency dominance, such as the statutory instrument of 2019 that temporarily banned foreign currency, resulted in widespread market disruptions and rapid informal dollarisation.
The current strategy suggests a shift toward what officials describe as a market-led de-dollarisation process. By adjusting the tax regime rather than imposing prohibitions, the government aims to incentivise gradual behavioural shifts rather than mandate them. Analysts have suggested that while the move could lead to marginal increases in ZiG usage for small transactions, its success will depend on broader macroeconomic factors such as inflation containment, stable exchange rates, and consistent supply of currency in both physical and digital form.
The fiscal implications of the VAT increase are also significant. VAT is a consumption tax, and while it offers a stable revenue base for governments, it can disproportionately affect lower-income households. In the context of Zimbabwe’s largely informal economy, the broadening of VAT rather than income-based taxation reflects structural constraints in the tax base and the persistent difficulties in capturing income from self-employed or cash-based activity.
From a regional integration perspective, Zimbabwe’s reforms are being positioned in alignment with broader continental frameworks such as the African Union Agenda 2063 and the Southern African Development Community’s Regional Indicative Strategic Development Plan. These frameworks emphasise intra-African trade, sustainable development, and the deepening of domestic financial systems. The push to increase use of the local currency fits within this developmental framing, offering an alternative to over-reliance on external monetary anchors.
Within the domestic context, the ZiG currency remains in a formative stage. Introduced as a new gold-backed unit, ZiG replaced the Zimbabwe dollar earlier this year following periods of sustained exchange rate depreciation. Government officials have stated that the currency is part of efforts to restore confidence and shield the economy from external volatility. However, widespread market adoption remains limited, and confidence among both retailers and consumers remains fragile.
The IMTT adjustment is therefore as much a signalling device as it is a fiscal tool. It reflects an acknowledgement by policymakers that monetary credibility must be earned incrementally and that digital infrastructure is central to any effective currency reform. The growth of Zimbabwe’s mobile money sector, led by platforms such as EcoCash, has created a transaction environment where small policy adjustments can have tangible effects on usage patterns.
Whether the reduction in digital tax will translate into meaningful gains in local currency adoption remains to be seen. Much will depend on the government’s capacity to stabilise macroeconomic conditions and ensure policy consistency. For now, the reduction in the IMTT on ZiG-denominated transactions offers a modest but strategic recalibration, one aimed at reshaping transactional incentives without undermining revenue stability.
