Cabinet approves compulsory use of electronic money

Zimbabwe's Cabinet has approved the compulsory usage of electronic money by all businesses as part of measures to fast-track the formalisation of the business sector. This comes after most big retailers, a key source of tax revenue, closed shops over unfair competition from players in the alternative market, New Zimbabwe notes. Official records show that informalisation in Zimbabwe is around 65% of the GDP with a huge chunk of workers being employed in the sector. Data also indicates that the informal sector has cost Zimbabwe at least $1.15bn in potential fiscal revenue between 2020 and 2023. Under the new framework, vendors will be licensed by local authorities in consultation with the central government. Information Minister Jenfan Muswere said: ‘Under short-term measures, the use of electronic money will now be compulsory for all businesses and shall be achieved through the introduction of a compulsory tax payment system to ensure that every eligible taxpayer pays tax, and the establishment of a Domestic Inter-agency Team to ensure informal sector compliance with tax laws.’ The government seeks to bring all businesses into the tax bracket and enhance the effectiveness of the foreign exchange market. In the long-term, the government will address the business environment to streamline fees.