The government proposed various changes to the tax and duty measures, including raising the VAT rate, revising gold royalties, introducing withholding tax on imported digital services, removing customs duties on certain raw materials, and reducing the money transfer tax.
Zimbabwe’s Ministry of Finance, Economic Development, and Investment Promotion (MoFEDIP) has presented the 2026 national budget to the Parliament on 27 November 2025, proposing higher VAT rates and digital service withholding taxes.
The proposed tax measures are as follows:
Incentives for outsourcing services
The government is offering incentives for Business and Knowledge Process Outsourcing (BKPO) operators, including a 15% corporate tax rate, to boost foreign earnings and employment, subject to meeting certain conditions.
Further advantages for BKPO operators include:
- A 100% capital allowance deduction in the first year of use.
- Exemption from non-resident tax on dividends.
- A corporate income tax credit of USD 1,500 per employee per annum through the Youth Employment Tax Incentive (YETI) framework.
- Suspension of customs duty on imported specified equipment.
VAT rate increase
The government proposes increasing the value added tax (VAT) rate from 15% to 15.5%, effective 1 January 2026.
Review of Intermediated Money Transfer Tax (IMTT)
The IMTT framework is being revised with the explicit goal of promoting the use of the local currency (ZiG) and lowering associated transaction costs.
- The IMTT rate on ZiG-denominated transactions is reduced from 2% to 1.5%.
- The IMTT on foreign currency transactions, however, will be maintained at 2%.
- The definition of “Financial Institution” for IMTT purposes is also expanded to include Microfinance Institutions.
Taxation of gold royalties
To ensure the mining sector contributes a proportionate share of revenue, the gold royalty structure is proposed to be harmonised and reviewed. The rates are structured to escalate based on the price per ounce:
- For prices up to USD 1,200 per ounce, the royalty rate is 3%.
- For prices between USD 1,201 and USD 2,500 per ounce, the royalty rate increases to 5%.
- For prices of USD 2,501 per ounce or more, the royalty rate is 10%.
Introduction of digital services withholding tax
The government has proposed introducing a digital services withholding tax (DSWT) for the 2026 budget. This new tax, levied instead of VAT on imported services, applies to payments made to offshore digital platforms.
Customs duty rationalisation
To strengthen local value chains and manufacturing competitiveness, the government is adjusting customs duties. These measures include:
- Aligning the customs duty rate on selected polyester staple fibres with dyed woven fabrics of cotton at a rate of 40% + USD 2.50 per kg to support the cotton-to-clothing value chain.
- Removing customs duty on selected imported raw materials, such as steel coils and plates, used in the manufacture of gas cylinders, aiming to reduce production costs and stimulate local output.
