Online Reporter
Business Reporter
Finance, Economic Development and Investment Promotion Minister Mthuli Ncube has proposed several targeted incentives for key sectors of the economy to support strong growth and promote competitiveness.
The incentives are contained in his US$9,5 billion 2026 National Budget, themed “Enhancing Drivers of Economic Growth and Transformation Towards Vision 2030”.
The fiscal plan lays out a vision for a future propelled by private investment and largely tax-funded public spending.
In a clear push to stimulate specific key sectors, Minister Ncube unveiled a strategic package of tax relief, with the most significant offers targeted at the manufacturing and outsourcing industries.
To fuel a “24-hour economy,” firms operating during extended production hours will be eligible for targeted tax incentives, including additional deductions on operational expenditure and accelerated wear-and-tear allowances on machinery.
In a key intervention for foreign investment and jobs, the business and knowledge process outsourcing (BKPO) sector was handed a generous package.
Qualifying firms will enjoy a flat corporate income tax rate of 15 percent, a 100 percent first-year capital allowance on equipment and an exemption from customs duty on imported specialised gear.
Further support for the business sector is the reduction of the intermediated money transfer tax (IMTT) on ZiG-denominated transactions from 2 percent to 1,5 percent, a move designed to promote the use of the local currency.
Crucially, the transaction tax on electronic transfers will now be tax-deductible for all businesses, lowering the overall corporate tax burden.
The budget provides targeted support, such as the suspension of customs duty on raw materials for local manufacturing.
The incentive signals a decisive push to lower production costs and revive industrial competitiveness.
Another industry policy support measure is the removal of customs duty on gas cylinder raw materials, which will ease cost pressures for manufacturers and help cut imports.
Likewise, the time-bound suspension of duties on critical inputs across iron, steel and agro-processing will support productivity and strengthen value chains.
Through targeting materials not sufficiently produced locally, the Government is striking a pragmatic balance between protecting industry and promoting efficient, export-driven manufacturing.
However, the Government has been trying to push the informal sector to participate in the economy. As a result, Treasury decided to increase taxes, which puts everyone under the same umbrella.
Effective January 1, 2026, the standard value-added tax (VAT) rate will increase from 15 percent to 15,5 percent, providing further revenue headroom for Treasury.
Framed as a “quid pro quo” for the IMTT reduction, this hike will make sure Treasury continues to collect the tax needed to finance Government operations, while also keeping the economy on a growth trajectory.
In a bid to broaden the tax base, a new digital services withholding tax was introduced on payments to offshore platforms, covering e-hailing services, online content and satellite internet.
This modernisation of tax collection makes the operating ground level as costs across the industry become uniform.
The mining sector, a key source of export earnings, will face a new tiered royalty structure for gold, with rates climbing as high as 10 percent during price booms.
This is a measure that gives the Government a fair share of earnings from the gold price boom and increases revenue in proportion to the resource price.
Furthermore, while some raw materials saw duty suspensions, Prof Ncube raised customs duty on imported polyester fibres and dyed cotton fabrics to 40 percent + US$2,50/kg, a protective measure that is meant to spur local textile production.
The 2026 budget ultimately reflects a Government trying to balance competing priorities, stimulating long-term, productive investment, while securing immediate
revenue to maintain its fiscal consolidation path.
As Zimbabwe starts implementing the National Development Strategy 2, the goal remains: the incentives must generate enough growth and ensure they are felt more than the new taxes introduced.
