Online Reporter
Michael Tome, Zimpapers Business Hub
SEVERAL new taxes came into effect from 1 January 2026, in line with provisions of Finance Act Number 7 of 2025, which legally supports pronouncements in the 2026 National Budget.
The new taxes are expected to boost Government revenue, strengthen compliance and align Zimbabwe’s tax framework with evolving economic realities.
The taxes cut across consumption, exports, e-commerce, mining and capital transactions, with varying implications for citizens, businesses and the country.
The legislation reflects the Government’s strategy to broaden the tax base and promote value addition, while balancing revenue mobilisation with targeted relief for strategic sectors.
While some of the taxes may increase indirect taxes for citizens in some areas, critically, they increase inflows to the Treasury and grow public revenues to support the provision of social services, key infrastructure and economic development.
Among the key new tax measures is the Value Added Tax (VAT), whose rate has increased from 15 percent to 15,5 percent.
The marginal increase is expected to generate additional revenue for the Government, given the broad consumption base.
According to a review and analysis by FBC Holdings, an increase in the standard VAT rate to 15,5 percent from 15 percent generates extra revenue for the Government and supports public services.
“Increase in standard VAT rate provides the government with additional revenue, which is crucial for funding essential public services and partially offsets the revenue forgone from other growth-oriented tax concessions, such as the reduction in IMTT.
“This measure, however, may trigger price reviews upwards, thus inflationary and will erode the disposable income of households and raise the operational costs of businesses across the board,” said FBC Holdings.
Zero-rating of services provided by tourist-designated facilities, accommodation to non-residents and hunting safari services has been removed, bringing the activities into the standard VAT net.
The adjustment will increase Government receipts from the tourism sector.
Tourism operators have already appealed to the Government to review the adjusted 15,5 percent VAT rate on tourism activities, cautioning that a sudden policy shift may threaten confirmed international bookings for 2026.
“As a tourism industry, and in Victoria Falls specifically, we deal with serious groups which ordinarily book one to two years in advance. When tour operators attend travel shows, they engage the market and take bookings for the upcoming year,” said Tourism Business Council of Zimbabwe (TBCZ) president Mr Clive Chinwada.
“Given that complexity, it is not easy to go back to clients and say we are reviewing rates which have already been distributed through intermediaries along the value chain.”
On the relief side, VAT exemptions for agricultural goods and services, medical supplies and rural electrification projects funded through the Rural Electrification Fund have been aligned in law, protecting critical social sectors from higher costs.
Mining companies planning investments of US$100 million or more may now register for VAT at the set-up stage, easing cash-flow pressures during project development.
Transaction taxes, levies and resource mobilisation
To encourage the use of the local currency, authorities reduced the Intermediated Money Transfer Tax (IMTT) on transactions conducted in ZiG from 2 percent to 1,5 percent, while maintaining the 2 percent rate on US dollar transactions.
The reduction is expected to lower transaction costs for consumers and businesses using ZiG, potentially improving its competitiveness relative to foreign currency.
“Reducing the rate for ZiG transactions creates a financial incentive to catalyse the use of the local currency within the economy, directly supporting monetary policy objectives,” said FBC Holdings in a review and analysis.
“Maintaining the higher rate on USD transfers, however, reflects the need to preserve a crucial revenue stream, acknowledging its reliance on this revenue source.”
In their commentary, professional advisors and business process outsourcing solutions firm, Lucent Consultancy, said: “Companies dealing with significant capital movements such as property sales, acquisition payments, loan repayments and large inter-company transfers will face a predictable, fixed and substantial tax cost, regardless of the transaction size above the threshold. This demands strict cash flow planning.”
To capture revenue from the growing digital economy, the Government introduced a 15 percent Digital Services Withholding Tax (DSWT).
The tax applies at the point of payment to foreign suppliers of digital services and intangible goods transmitted electronically.
This benefits the fiscus by taxing previously hard-to-reach digital transactions, while consumers may face higher subscription or service costs as providers pass on the tax.
“The DSWT was introduced to improve the collection of VAT on imported services and not as an additional tax. The measure is an administrative mechanism intended to enhance tax compliance by shifting the point of collection to regulated payment intermediaries, including banks, mobile money operators and other financial institutions,” said Finance, Economic Development and Investment
Promotion Minister Professor Mthuli Ncube in a statement clarifying the treatment and scope of DSWT.
“It is envisaged that this measure will facilitate efficient and consistent collection, at source, of VAT on imported digital services already chargeable under the VAT legislation.”
Finance Act number 7 of 2025 mandates that all export taxes be payable in foreign currency, directly supporting the country’s foreign exchange inflows.
A tiered export tax on lithium has been introduced, with 10 percent on ore and concentrates and zero percent on lithium sulphate, signalling the Government’s push for local beneficiation.
In this regard, citizens stand to benefit indirectly through increased industrial activity and job creation as miners are obligated to process minerals locally.
New export taxes introduced include the 10 percent tax on antimony and related products, 10 percent tax on unbeneficiated chrome, while the black granite export tax is now based on the value of cut and polished stone rather than raw exports.
These measures are designed to maximise value from natural resources, though they may raise costs for exporters in the short term.
A 3 percent levy on the gross value of sales or exports of coal, lithium, black granite, quarry stones and dimensional stone has been introduced, with coal newly included as a taxable commodity.
While this strengthens revenue from natural resources, it may raise production costs that could be passed on through prices or reduced margins.
On capital transactions, the disposal of shares or interests in land-holding entities is now subject to a special capital gains tax, closing a long-standing avoidance route where property was transferred indirectly through shares.
Conversely, disposals of shares in State-owned or controlled entities may be exempt, where prescribed by the minister responsible, giving the Government flexibility in restructuring state entities.
Business and Knowledge Process Outsourcing (BKPO) firms are among beneficiaries under income tax, as companies in the sector now qualify for a tax credit of US$1 500 per additional employee per year, capped at US$60 000 annually.
In addition, BKPO firms are entitled to a 100 percent capital expenditure deduction, while their taxable income will be charged at a preferential rate of 15 percent, well below the standard corporate tax rate.
Lucent Consultancy said the move was critical in enticing international firms to offer services locally.
“These are powerful incentives designed to attract international firms offering routine or knowledge-intensive tasks (call centres, back-office, data processing) to establish major hubs in the country. This creates a significant competitive advantage over regional neighbours,” according to Lucent Consultancy.
As for the Government, the incentive package is designed to position Zimbabwe as a competitive outsourcing destination, attract foreign investment and expand the formal employment base.
For citizens, the expected benefit lies in increased job opportunities, skills transfer and higher household incomes.
Targeted exemptions
Several strategic exemptions were retained, including Mutapa Investment Fund, which is exempt from income tax from 1 January 2025, while Infralink’s Plumtree-Mutare toll revenue is exempt, provided it is used solely for road maintenance.
Income earned by Real Estate Investment Trusts (REITs) created from pooled pension funds has also been exempted, supporting long-term savings.
Gold royalties have been harmonised into a price-based sliding scale of 3 percent, 5 percent and 10 percent for miners other than small-scale operators.
“High royalties and restricted Capex allowances make industrial-scale mine development almost impossible. The economics simply do not work,” said Bankers Association of Zimbabwe (BAZ) president Ms Sibongile Moyo, commenting on the mining royalties.
Capital gains tax (CGT) is exempt on transfers of shares from State-owned enterprises to specified entities, while a 20 percent special CGT has been introduced on indirect offshore share transfers linked to Zimbabwean immovable property, closing avoidance loopholes.
Income tax reforms reflect the Government’s strategy to balance revenue mobilisation with targeted incentives, with citizens likely to feel short-term impacts through sector-specific price adjustments, but longer-term gains through employment growth, infrastructure development and improved public services.
Several sectors previously under presumptive tax regimes have been shifted into a more transparent taxation framework.
Public service buses, commuter omnibuses with seating capacity above 25 passengers, haulage trucks and commercial water vessels will migrate from presumptive tax to self-assessment, aligning tax liabilities with actual earnings and improving revenue fairness.
Property owners renting out business premises are now required to register for a Presumptive Rental Income Tax, charged at 15 percent of gross rental income.
The tax is final, simplifying compliance while ensuring consistent Government revenue. Tenants may indirectly face higher rentals as landlords adjust to the tax.
In the gaming sector, Gaming Operators Tax has been set at 20 percent of gross monthly takings, while punters’ winnings tax is now 25 percent of gross winnings, significantly boosting public revenue from gambling activities.
Bongani Ndlovu