Mthuli Ncube Introduces USD Cash Withdrawal Tax To ‘Discourage Excessive Cash Withdrawals’
Zimbabwe Finance Minister Mthuli Ncube has introduced a new tiered tax on United States dollar cash withdrawals, a measure he states is designed to curb the high volume of physical cash circulating in the economy. The controversial levy, announced as part of the 2026 National Budget Statement presented to Parliament on 27 November 2025, aims to push citizens and businesses towards digital payments.
This move has sparked an immediate and fiery debate across the nation, with many questioning its impact on the average person already struggling with high banking costs.
How Zimbabwe’s New USD Cash Tax Will Work
The new levy introduces a tiered system based on the amount of cash an individual or company withdraws each month.
For individuals, withdrawals up to US$500 (approximately ZAR 9,500) will remain tax-free. However, any amount withdrawn between US$501 and US$1,000 will be taxed at a rate of 2%. Any individual withdrawal exceeding US$1,001 for the month will be subject to the full 2% levy on the entire amount.
The system is slightly different for corporate entities, with a 0% rate on the first US$5,000, 2% on amounts between US$5,001 and US$10,000, and 3% on withdrawals above US$10,001. The tax will only apply to foreign currency withdrawals, not those in the local Zimbabwean dollar.
In his budget speech, Professor Mthuli Ncube provided a detailed justification for the policy, highlighting the scale of cash usage. He stated:
“Although the local currency has remained stable since September 2024, the preference for foreign currency cash persists due to perceptions of value preservation and wider acceptability. This widespread reliance on physical cash undermines transparency, reduces traceability of transactions and significantly limits the effectiveness of tax administration and revenue collection.”
The Minister provided specific figures to illustrate the problem, noting:
“Current statistics show that the bulk of cash circulating in the Emerging Sector is sourced directly from the formal financial system. On average, ATM withdrawals amounted to approximately US$265.8 million per month between April 2024 and June 2025, of which over 90% were in United States dollars. Banks currently maintain nearly US$1 billion in cash and nostro balances to meet withdrawal demand.”
He further explained the reasoning behind the new measure, stating:
“The continued increase in cash withdrawals, which reached US$353 million in June 2025, heightens risks of informality, tax evasion, corruption and administrative inefficiencies. In light of these challenges, it is imperative to introduce measures that discourage excessive cash withdrawals, enhance transparency, strengthen tax compliance and gradually shift economic activity toward formal and digital payment platforms.”
A Wave Of Public And Expert Backlash
The announcement was met with swift and severe criticism from various quarters on social media platform X. Prominent lawyer and politician Fadzayi Mahere directly challenged the Minister, questioning the logic of punishing people for using the formal banking system. In a post on 27 November 2025, she wrote:
“Why are you introducing a tax for withdrawing cash when bank charges are already so extortionate? Can you not see that you’re going to disincentivise use of the banking system? In normal countries, banking money earns you interest – in Zimbabwe, why do you punish people for using formal banking channels?”
Economist Professor Gift Mugano also expressed deep confusion and concern over the new levy. He highlighted a contradiction in government policy, noting that just months earlier, the government had promised to reduce bank charges. In his post on 27 November 2025, Professor Mugano stated:
“Surprisingly, in his 2026 budget statement which he presented today he introduced cash withdrawal levy – he increased bank charges. I don’t get it! This move will further entrenches informalisation of cash. Why would one use formal payments when cash transactions don’t attract taxes?”
Ordinary citizens joined the fray, with Blessing Museki raising a practical concern, stating,
“Anyone with basic arithmetic skills would not choose electronic payments unless money in the bank is 100% equivalent to cash in hand. Which in Zimbabwe it isn’t.”
What It Means For Your Wallet
For the average Zimbabwean, the immediate effect is that accessing their own US dollar savings will become more expensive.
Anyone who needs to withdraw more than US$500 in a month, for any reason, will have a portion of their funds withheld as tax. This comes on top of the 2% Intermediate Money Transfer Tax (IMTT), which the minister refused to scrap or adjust.
Citizens fear the new withdrawal tax on USD transactions will drive more economic activity underground into the informal cash-based economy, achieving the opposite of the stated goal.
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The post Zimbabwe Finance Minister Introduces New Tax On USD Cash Withdrawals: Here Is How It Affects You appeared first on iHarare News.
