In Zimbabwe’s 2026 fiscal year, the Finance Act (No. 7) of 2025 has introduced a game-changing—and controversial—mechanism to formalize the shadow economy: the Presumptive Rental Tax.This is not just a new tax; it is a fundamental shift in how ZIMRA (Zimbabwe Revenue Authority) enforces compliance by turning property owners into “enforcement agents.”
Deputizing the Landlord: A Guide to the New Presumptive Rental Tax
For years, thousands of small businesses—hairdressers, tailors, and small-scale traders—operated in the “informal” space, often evading the tax net. Under the new laws effective January 1, 2026, the government has closed this loop by targeting the one thing every business needs: physical space.
1. How the Presumptive Rental Tax Works
The mechanism is simple but aggressive. It shifts the burden of tax collection from ZIMRA to the landlord or property manager.
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The 10% Withholding Rule: If you own a commercial property (a mall, office block, or even a subdivided shop) and your tenant is an informal operator who cannot produce a valid Tax Clearance Certificate (ITF263), you are legally required to withhold 10% of their gross rent.
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Remittance: The landlord must then remit this 10% directly to ZIMRA.
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Quarterly Reporting: Property owners must now submit Quarterly Tenant Registers and occupancy lists to ZIMRA. This creates a digital map of every business operating in a building, leaving nowhere for informal traders to hide.
2. Who is Affected?
For Small Business Owners (Tenants):
If you are a “presumptive taxpayer” (e.g., you pay a flat fee for a market stall or salon chair), you will feel the pinch immediately.
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Automatic “Rent Hike”: Effectively, your rent increases by 10% unless you formalize. If you pay $500 rent, the landlord takes $50 and gives it to ZIMRA, meaning you’ve paid $500 but only $450 went to your “shelter.”
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Pressure to Formalize: The only way to stop this 10% deduction is to register with ZIMRA, file your returns, and get an ITF263 tax clearance.
For Landlords & Property Managers:
The administrative burden is now yours.
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Personal Liability: If you fail to verify a tenant’s tax status or fail to withhold the 10%, you become personally liable for that tax. ZIMRA can bill you for the money your tenant didn’t pay.
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Enforcement Powers: Under Finance Act No. 7, ZIMRA now has the power to temporarily close a building if the owner fails to maintain a proper tenant register or account for the rental tax.
3. The Impact: Pros and Cons
| The Positives (The “Pro-Growth” View) | The Negatives (The “Market” View) |
| Formalization: Forces small businesses to enter the formal economy, making them eligible for bank loans and tenders. | Increased Costs: Small businesses already struggling with inflation now face a 10% “compliance cost” on their biggest overhead—rent. |
| Fairness: Ensures that “brick-and-mortar” informal shops contribute to the national purse just like registered SMEs. | Rent Inflation: Landlords are likely to increase base rents to cover the administrative costs of being a “tax collector.” |
| Data Accuracy: ZIMRA gains a massive database of economic activity through the mandatory tenant registers. | Potential Closures: Vulnerable businesses may be forced out of formal buildings and back onto the streets to avoid the tax. |
4. Will it Boost the Economy?
In the short term, this will undoubtedly boost government revenue by capturing a sector that was previously invisible. However, the long-term economic boost depends on whether small businesses choose to formalize or flee.
If traders move into the formal net to avoid the 10% penalty, the economy gains a more structured, bankable SME sector. If the 10% burden is too high, we may see an increase in “street vending” as businesses abandon formal shops to avoid the watchful eye of the landlord-turned-taxman.
