Finance, Economic Development and Investment Promotion Minister Mthuli Ncube has proposed linking the renewal of council licences for vendors and small businesses to tax compliance, a move likely to place additional pressure on Zimbabwe’s already struggling informal sector.
Ncube made the proposal during the 2026 Mid-Term National Budget Business Breakfast Forum while responding to concerns over the need to accelerate the formalisation of small and medium enterprises (SMEs) and ease the tax burden on the formal private sector.
The minister argued that SMEs should no longer simply be treated as informal operators because many of them are already registered, licensed and regulated by local authorities.
“SMEs should no longer be viewed as informal businesses when they are already licensed and regulated by local authorities,” Ncube said.
He proposed closer cooperation between the Zimbabwe Revenue Authority (ZIMRA) and local authorities, including the sharing of information to enable the tax authority to track businesses operating under council licences.
Under the proposed system, vendors could be required to demonstrate compliance with presumptive tax obligations before their council licences are renewed.
Ncube said this could be achieved through integrated online platforms connecting local authorities and ZIMRA, effectively making tax compliance a condition for continued operation.
The proposal has raised concerns over whether the government is seeking to formalise SMEs through incentives or by placing greater financial and administrative pressure on small traders who are already battling rising operating costs.
Ncube, however, defended the approach as a way of expanding the country’s narrow tax base and ensuring that businesses operating formally do not carry a disproportionate share of the tax burden.
“We need to broaden the tax base and create a fairer tax environment for compliant businesses,” he said.
The proposal comes amid growing pressure on the government to increase domestic revenue, with SMEs and informal traders forming a significant part of Zimbabwe’s economic activity.
Critics are likely to question whether tying operating licences to tax compliance could push some vulnerable traders further into financial difficulty, particularly if enforcement is introduced without corresponding improvements in access to finance, markets and affordable business infrastructure.
The proposed integration between councils and ZIMRA therefore represents a significant shift towards tighter monitoring of small businesses, with vendors potentially facing the loss of their operating licences if they fail to meet tax obligations.
