Vendors visible to ZIMRA but not labor law

According to statistical data 90% of all mobile transactions is attributed to trading. Informal traders are systemically being included into ZIMRA’s accounting spreadsheets. To date, through its various initiatives, ZIMRA has capacitated the tax net to include the informal sector. But while vendors can’t escape the tax radar, they get zero cognizance from existing labor laws.

street vendor… highly taxed yet ignored by local las (photo from Pexels)

Currently, Zimbabwe’s trading sector thrives on plastic money, and ZIMRA’s long arm continues to widen its revenue by taxing small scale vendors who are already burdened by presumptive tax, VAT among a plethora of other “hidden taxes”. The result: Vendors are victims to a tax policy that punishes them and social policy that ignores them.

Customer reliance on mobile money transactions is the main push factor for vendors to take lead as largest contributors of transfer tax, otherwise known as Intermediated Money Transfer Tax (IMMT). Though vendors seem like the proprietors to this tax, both in reality and on paper fiscal budgets turn a blind eye to small scale business owners.

Regardless of the heavy load in taxes, vendors lack presentation worthy of taxpayers. Committing to Formalizing the informal sector was the brainchild of government in the National Development Strategy 1(NDS1). It seemed like a sweet pot then, but three years later street vendors who rely on thin profit margins lose 25–35% of their turnover to Intermediated Money Transfer Tax (IMMT) every time they make a moneyless transaction.

When asked about IMTT most vendors are in the dark of the existence of such a tax. “I think it’s a transfer charge” said Natasha Taundi a cosmetic vendor in Marondera. Well it’s not, ZINARA takes 2% of all mobile money above a $4.99 transaction. With lack of clear policy communication IMMT seems like an invisible tax to most small-scale merchants.

It might seemingly be a small amount in reading, but vendors experience the full blow of IMTT owing to the dominance of mobile transactions. Mbuya Dembo a tomato vendor In Marondera sells an average of $100 of merchandise by day end. Her customers use mobile money to purchase, and she also uses her mobile wallet to restock, by month end she pays $60 in transfer tax.

Treasury data confirmed IMMT amounts to $2.5M/year with vendors contributing 60–70% of this annual assortment. In reaction, the Vendors Initiative for Social Economic Transformation (VISET) Chairperson Samuel Wadzai, requested for the treasury to ringfence 10% of IMTT to cater for service delivery particularly building toilets for vendors. The appeal has fell on deaf ears for the third time in counting, nothing has been done to date that specifically caters for vendors who pay the greater proportion of the “invisible tax”. In fact, they are victims of evictions and threats from officials.

The Value Added Tax is yet another blow on vendors. While targeting mid-tier vendors aiming to increase their stock and trade, VAT has inevitably added its weight on street sellers as well. ZIMRA proves highly competent in tracking informal trade earnings and incorporating more vendors in the taxation system. The increase in VAT from 15% to 15.5 in January affects mid-level vendors directly and low-end vendors subsequently feel the whip indirectly.

An estimated 20% of vendors are potentially taxable under formal regimes, the number continues rise since the 2024 threshold cut from $4.000 per year to $2.500, a move aimed to compel more vendors to register. Currently, vendors who sell an average stock of $69/day are eligible to register for VAT. As of now some vendors who crossed this margin in 2024/5 are receiving letters from ZIMRA advising them to register.

Though increase in VAT hits the formal sector the most, 80% of informal traders feel the weight of the cross just as much as wholesalers simply pass the VAT cost down to low-tier merchants by including VAT on the markup price. If vendors on the other hand try to raise prices to cover the tax impact, they lose customers, so they just absorb the tax at the expense of their profit.

The sad narration of vendor predicament came alive after the 2026 Harare budget; $2.1 million was collected in licenses, on top of that $5.5million vendors pay mobile transfer tax, the proceeds of which go to Consolidated Revenue Fund, not even a cent is allocated to cater for the country’s largest workforce. Furthermore, 10% is withheld by their landlords under the new presumptive tax, yet there is nothing to show for it, no toilets, no boreholes as per request. Vendors pay tax like formal workers but they are treated like outlaws.

As a result, vendors end up being charged VAT to buy goods, and get taxed IMTT when selling them. These low earners are presumed rich, so are taxed from all angles through a regressive “hidden tax system” of licenses, fees and bribes. Yet, in 2003 the government vowed to the International Labor Organization (ILO) to protect the people driving the number 1 source of sustenance in Zimbabwe’s urban economy. Making the current vendor predicament the largest labor violation in the region.