01/12/2024
2025 Budget Highlights
Minister of Finance Mthuli Ncube delivered his budget on Thursday. The budget was in Zig so not meaningful for most of us.
GPD estimates were bandied about, but must be taken with a pinch of salt given that we are 70% informal. Minister says GDP will grow 6.6% because La Nina induced rains will give us more Zesa and Agricultural produce.
Nothing has been done to alleviate the tax burden on formal business, who pay 2% IMTT (non deductible) , on top of a myriad of formal taxes they already pay.
It also premises ZiG inflation of around 3% per month, but a relative stable exchange rate, 39:1 for 2025, which must be a result of a particularly pleasant dream by the minister ! Amusingly, the power cut at Parliament at the end of his speech may have wakened him up a bit.
The reality is that the Government is broke, and treasury has stopped paying all creditors except the civil service, we have a crisis situation with power, water, roads, railways, debt, currency…..
The budget showed no compassion for the poor, being the majority who voted Zanu PF into power…workers are heavily overtaxed, and the crippling taxes (starting after the first $100/month) for them are patently unfair. Yes the ZiG tax bands have moved up, but an assumed exchange rate of ZiG 28:1 from 1st January does not reflect realities on the ground.
The pathetic allocations to health and social care for the rural and urban poor continue, as in previous years, only 9% of budget, falling well short of 15% required by the Abuja Declaration. And year to date September spend in Health was way short of budget, unlike President’s Office, or Electoral Commission who have overspent. As usual, the government will look to the West for more than half of health spending. Whether Donald Trump is happy for the US to continue funding the majority of health programs through the UN and WHO remains to be seen !
Tax Highlights (all from 1st January 2025 unless otherwise stated)
• No change to corporate or personal taxes, except PAYE ZiG bands.
• VAT will be payable by 15th of month following invoice.
• VAT on Imported Services payable in 15 days.
• Surcharges of retailers plastic bags (20%) and fast foods (0.5%).
• Special Economic Zones benefits will fall away and be replaced with 15% Corporation Tax.
• Royalties on Coal Products, Black Granite and Quarry Stone. (2%)
• Product price for Royalty calculations clarified as higher of delivery date or receipt date. This applies mainly to spodumene and petalite contracts.
• CGT will be 1% (from 2%) on sale of listed Securities.
• Special CGT on transfer of mining rights now effective from 31st December 2023.
• Additional Tax on Bookmakers (3%), and bet winners (10%).
• In the Speech but not the Finance Bill:
o Informal business to fiscalise, even if revenues under $25,000
o All contractor and tenderers over $25,000 must be VAT registered
o Informal traders to register for Income Tax, otherwise there will be quarterly deemed income. There is a list of occupations; upholsters, hardware merchants, grocery sellers etc.
