Zimbabwe has released its 2026 Budget proposals and “proposals” may be an understatement. The package represents one of the most extensive tax overhauls the country has seen in years, cutting across indirect taxes, mining, financial services, digital services, and administrative compliance.
Most changes are expected to take effect on 1 January 2026, and businesses operating in or trading with Zimbabwe will need to begin planning now to understand the practical implications.
Below is a breakdown of the most notable measures and what they mean in practice.
Indirect Taxes: A Broader VAT Net and Focus on Compliance
Zimbabwe is proposing several VAT-related measures designed to raise revenue, tighten administration, and ensure better alignment between consumption and tax collection.
VAT rate increase
The standard VAT rate is set to increase from 15% to 15.5%.
VAT on imported services
Where services are imported, VAT must now be paid in the currency of the underlying trade. Failure to do so will attract penalties and interest, a notable compliance tightening for cross-border service arrangements.
Going-concern sales lose their concession
Sales of going concerns will no longer be zero-rated, except where the purchaser is a government entity. Transactions between registered operators will therefore attract VAT at the standard rate.
Wider net on food, financial services, and local authority supplies
- Selected fruit and vegetable supplies, where these are not predominately consumed by economically vulnerable persons, will now become taxable.
- Financial services provided to corporates, as well as certain services supplied by local authorities, will be subject to VAT at the standard rate.
VAT incentives for beneficiation projects
Mining companies investing at least USD 100 million in beneficiation plants may register for VAT during the plant set-up phase, subject to Ministerial approval.
Money Transfer Tax Adjustments
A rare piece of good news: the money transfer tax on ZiG-denominated transactions will fall from 2% to 1.5% and will now be tax-deductible where incurred by a business. However, the rate will remain 2% for USD or other foreign currency transactions.
Digital Services and Cross-Border Transactions
Zimbabwe continues to expand its tax base in the digital economy.
15% withholding tax on imported digital services.
Payments to offshore digital platforms, including e-hailing fees will attract a 15% withholding tax. This replaces the VAT obligation that typically applies to imported digital services.
15% withholding tax on interest paid to non-residents.
A new withholding tax on outbound interest will apply at 15%, excluding interest on loans from the central government.
Banking and Financial Sector Reforms
The banking sector sees a number of adjustments aimed at aligning disparate tax treatment and closing perceived gaps:
- Banks must now withhold tax on dividends, bringing them in line with building societies.
- Banks will be permitted to deduct interest paid on deposits for corporate income tax purposes. This is a very welcome change.
Mining Sector: Royalties, Transfer Pricing, and Loss Limitations
Mining remains central to Zimbabwe’s economy, and the changes reflect the Government’s intent to improve compliance, prevent base erosion, and encourage value addition.
Restrictions on loss utilisation
Mining companies will be limited to deducting 30% of taxable income using assessed losses brought forward.
Capital redemption allowance alignment
Capital allowances will now be aligned to the useful life of the mining asset, rather than accelerated deductions.
Graduated gold royalties
A new royalty scale will apply:
- 3% on the first 1 200 ounces,
- 5% from 1 201 to 2 500 ounces,
- 10% on production above 2 500 ounces.
- Export taxes on un-beneficiated minerals
- Export tax on Antimony, Chrome and un-beneficiated Lithium will apply and must be paid in foreign currency.
- The export tax on un-beneficiated platinum will temporarily fall from 5% to 3% for 12 months from 1 January 2025.
Export taxes will not be tax-deductible.
A new 2% tax will also be imposed on coal production.
Transfer pricing tightening
Mining companies exporting to related parties will be required to use a Quoted Price as the primary transfer pricing method, a clear move toward transparency and revenue protection.
Permanent Establishment (PE) Threshold Reduced
The PE threshold will drop from 183 days to 90 days.
For construction projects, a PE will be deemed to arise from day one, significantly lowering the barrier for foreign companies becoming taxable in Zimbabwe.
Gambling and Betting Sector: Higher Taxes, More Operators Covered
Zimbabwe plans a substantial expansion and increase of taxes on gaming:
- Bookmakers tax will apply to all licensed bookmakers, lotteries, and casinos.
- The rate will rise to 20% of gross revenues, and the tax becomes final, meaning bookmakers won’t 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.
Examples:
- Individuals withdrawing above USD 1 001 monthly will pay 3%.
- Corporates withdrawing above USD 10 001 monthly will also pay 3%.
- No levy applies to withdrawals of local currency.
Rental Income Withholding Tax
A new 10% withholding tax will apply to rental income, broadening the tax net and supporting enforcement.
Incentives for Business & Knowledge Process Outsourcing (BPO/KPO)
To attract global outsourcing operations, the following incentives are proposed:
- 15% corporate tax rate
- 100% capital allowances in year one
- Exemption from non-residents tax on dividends
- A USD 1 500 per employee annual tax credit under the Youth Employment Incentive
- A flat 15% tax rate for essential skilled expatriate staff
These are significant incentives and demonstrate a strategic intent to expand Zimbabwe’s participation in the global outsourcing market.
Administrative Overhaul: Digital Compliance and Automatic Data Sharing
Zimbabwe’s revenue authority, ZIMRA, will gain greater visibility over business transactions:
- A Tax Identification Number (TIN) will be required to open a business bank account.
- Merchant wallets on mobile networks will require a TIN.
- Transaction data from banks and mobile operators will be automatically transmitted to ZIMRA, enabling real-time oversight of taxable activities.
This represents one of the most ambitious tax-administration modernisation steps the country has taken.
Final Thoughts
Zimbabwe’s 2026 Budget is not a simple adjustment, it is a broad and ambitious restructuring of the tax system. The proposals touch nearly every sector, with particular emphasis on expanding the tax base, improving compliance, encouraging beneficiation, and driving digital transparency.
For businesses operating in or engaging with Zimbabwe, early preparation will be essential. Many of these measures materially affect pricing, structuring, transfer pricing, cash flow, and compliance processes.
If you need help unpacking these reforms, modelling the impact, or reviewing your group’s exposure, our team can guide you through each step.
Get in touch for tailored advice and ensure your organisation stays compliant, competitive, and prepared for Zimbabwe’s fast-evolving tax environment.
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