THE Zimbabwe Stock Exchange Holdings (ZSEH) is pushing for a reduction in the current 1% capital gains withholding tax (CGWT) to boost selloffs on the ZSE and make the market more attractive to investors, Standardbusiness understands.
To defend the free-falling RTGS before it was replaced by Zimbabwe Gold (ZiG) in April 2024, the government imposed a 40% capital gains tax (CGT) on stocks sold within 270 days of purchase on the ZSE.
However, the CGT, introduced in 2022, sparked a decline in investment interest and trading activity on the bourse.
CGT was a tax on profit made from selling shares, while CGWT is a separate mechanism where a small percentage is deducted upfront from the sale price—regardless of profit—and remitted to the Zimbabwe Revenue Authority.
Since then, the CGWT has been reduced from 4% to 1% as of December 28, 2024, and the 40% CGT has been suspended, as Zimbabwe works towards attracting investors. ZSEH now wants the CGWT lowered even further.
The ZSE market capitalisation for the second quarter stood at ZiG62,64 billion (US$2,33 billion), a decrease of 3,08% from the previous quarter, according to market data.
“In terms of taxes and everything, the government has been better for us. They have lowered their taxes quite a bit,” ZSEH chief executive officer Justin Bgoni told Standardbusiness in an interview.
“It was 4% a couple of years ago, now it is 1%. We would be happy to have them be lower, but 1% is a fair tax.”
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He said reducing taxes on the sale of listed securities, such as through a reduced withholding tax, made it cheaper and more attractive for investors to trade, thereby increasing market liquidity.
“With fewer tax frictions, investors are more willing to sell off holdings when needed, knowing that their returns would not be heavily eroded by taxes,” Bgoni said.
“This encourages active participation, facilitates quicker price discovery, and allows institutional and retail investors to rebalance portfolios more freely—ultimately leading to healthier, more efficient market activity on the bourse.”
Bgoni said ZSEH, together with the Securities and Exchange Commission of Zimbabwe, had been working to reduce taxes on listed securities in the country.
He added that the ZSE had become more attractive due to the willing seller–willing buyer market on forex and the ability to buy stocks with ZiG.
