Zimbabwe has released its 2026 Budget proposals, and the scale of the changes marks one of the most extensive tax overhauls the country has seen in years. The proposals cut across indirect taxes, mining, financial services, digital transactions, gambling, and tax administration.
Most measures are expected to take effect on 1 January 2026, meaning businesses operating in Zimbabwe—or trading with the country—will need to begin planning early to understand the practical and financial impact.
Below is a clear breakdown of the most significant proposals and what they mean in practice.
Indirect Tax: Wider VAT Net and Tighter Compliance
Zimbabwe is proposing several changes to VAT aimed at increasing revenue, improving compliance, and aligning consumption with tax collection. The standard VAT rate is set to rise from 15% to 15.5%. For imported services, VAT will now have to be paid in the currency of the underlying transaction. Failure to comply will attract penalties and interest, tightening rules for cross-border service arrangements.
Sales of going concerns will lose their zero-rating, except where the buyer is a government entity. Transactions between registered operators will therefore attract VAT at the standard rate.
The VAT net will also be widened. Certain fruit and vegetable supplies not predominantly consumed by economically vulnerable groups will become taxable. Financial services provided to corporates and some services supplied by local authorities will also attract VAT at the standard rate.
Mining companies investing at least USD 100 million in beneficiation plants may be allowed to register for VAT during the construction phase, subject to approval by the Minister.
Money Transfer Tax Adjustments
The money transfer tax on ZiG-denominated transactions will fall from 2% to 1.5%. The tax will also become deductible for businesses, offering some relief. However, the rate will remain 2% for transactions conducted in USD or other foreign currencies.
Digital Services and Cross-Border Transactions
Zimbabwe continues to expand its tax base in the digital economy. A new 15% withholding tax will apply to payments for imported digital services, including e-hailing platform fees. This replaces the VAT that typically applies to imported digital services.
Interest paid to non-residents will also attract a 15% withholding tax, except where the loan is issued by the central government.
Banking and Financial Sector Reforms
Several changes are proposed for the banking sector to harmonise tax treatment and close perceived loopholes. Banks will now be required to withhold tax on dividends, bringing them in line with building societies. At the same time, banks will be allowed to deduct interest paid on deposits when calculating corporate income tax, a change welcomed by the sector.
Mining Sector: Royalties, Loss Limits, and Transfer Pricing
Mining remains central to Zimbabwe’s economy, and the proposed reforms focus on compliance, revenue protection, and value addition. Mining companies will be restricted to using assessed losses brought forward to offset only 30% of taxable income in a given year.
Capital redemption allowances will be aligned with the actual useful life of mining assets, rather than allowing accelerated deductions. A new graduated royalty system will apply to gold production. Royalties will be charged at 3% on the first 1,200 ounces, 5% on production between 1,201 and 2,500 ounces, and 10% on output above 2,500 ounces.
Export taxes will apply to un-beneficiated Antimony, Chrome, and Lithium and must be paid in foreign currency. The export tax on un-beneficiated platinum will temporarily drop from 5% to 3% for 12 months starting 1 January 2025. These export taxes will not be tax-deductible.
A new 2% tax will also be introduced on coal production. Mining companies exporting to related parties will be required to use quoted prices as the primary transfer pricing method, strengthening transparency and reducing base erosion.
Permanent Establishment Threshold Reduced
The permanent establishment threshold will be reduced from 183 days to 90 days. For construction projects, a permanent establishment will be deemed to arise from day one, significantly increasing the likelihood that foreign contractors become taxable in Zimbabwe.
Gambling and Betting Sector: Higher and Broader Taxes
Zimbabwe plans to significantly expand and increase taxation in the gambling sector. Bookmakers tax will apply to all licensed bookmakers, lotteries, and casinos. The tax rate will rise to 20% of gross revenues and will become final, meaning operators will no longer be subject to income tax. Withholding tax on betting winnings will increase to 25%.
Cash Withdrawal Levy Increases
The levy on foreign currency withdrawals will increase and become more progressive. Individuals withdrawing more than USD 1,001 per month will pay a 3% levy, while corporates withdrawing above USD 10,001 will also pay 3%. No levy will apply to local currency withdrawals.
Rental Income Withholding Tax
A new 10% withholding tax will apply to rental income, broadening the tax base and strengthening enforcement.
Incentives for BPO and KPO Businesses
To attract global business and knowledge process outsourcing operations, Zimbabwe is proposing generous incentives. These include a 15% corporate tax rate, 100% capital allowances in the first year, exemption from non-resident dividend tax, and a USD 1,500 per employee annual tax credit under the Youth Employment Incentive.
A flat 15% tax rate will also apply to essential skilled expatriate staff.
Tax Administrative Overhaul and Digital Compliance
Zimbabwe Revenue Authority (ZIMRA) will gain expanded visibility over business activity. A Tax Identification Number will be required to open a business bank account. Merchant wallets on mobile platforms will also require a TIN. Transaction data from banks and mobile network operators will be automatically transmitted to ZIMRA, enabling near real-time oversight of taxable activity.
This represents one of the most ambitious tax-administration modernization efforts Zimbabwe has undertaken and signals a strong push toward digital compliance and enforcement.
