Tax and Economic Implications of Statutory Instrument 175 of 2026

SI Overview

On October 30, 2026, the Government of Zimbabwe gazetted Statutory Instrument 175 of 2026, titled the Value Added Tax (General) (Amendment) Regulations, 2026 (No. 80). Promulgated by the Minister of Finance, Economic Development and Investment Promotion pursuant to section 78 of the Value Added Tax Act [Chapter 23:12], the statutory instrument enacts a single, targeted regulatory amendment to the Second Schedule of the Value Added Tax (General) Regulations, 2003 (SI 273 of 2003).

Specifically, SI 175 of 2026 inserts a new paragraph into the Second Schedule:

“2. Supply of gold to a gold refinery holding a gold dealership licence issued in terms of the Gold Trade Act [Chapter 22:01].”

While brief in text, SI 175 of 2026 carries significant fiscal, macroeconomic, and administrative implications for Zimbabwe’s gold supply chain, mining sector, and broader economy. By granting zero-rated VAT status to domestic sales of gold to licensed refineries, the statutory instrument aligns secondary gold processing with raw gold supply structures, directly affecting cash flows, formal market incentivisation, and national mineral revenue policies.

Legal Context and Structure

Enactment and Retroactivity

Promulgated under the parent statute—the Value Added Tax Act [Chapter 23:12]—SI 175 of 2026 contains a retroactive effective date provision:

• Gazette Date: October 30, 2026
• Deemed Commencement Date: January 1, 2026 (Section 2)

Retroactive tax provisions are typically implemented to align tax administration with earlier policy directives (e.g., annual national budget statements) or to provide administrative relief for transactions executed during the current tax year prior to gazetting.

Legislative Mechanism: Zero-Rating vs. Exemption

To fully grasp the economic impact, it is essential to distinguish between Zero-Rating (Second Schedule) and Exemption (First Schedule) under the Value Added Tax Act:

+-----------------------------------------------------------------------------------+
|                                  VAT MECHANICS                                    |
+---------------------------------------------------+-------------------------------+
|                    ZERO-RATED                     |            EXEMPT             |
|                 (Second Schedule)                 |        (First Schedule)       |
+---------------------------------------------------+-------------------------------+
| • Output Tax: 0% charged on final supply          | • Output Tax: None charged    |
| • Input Tax: Operator CAN claim input VAT credits | • Input Tax: CANNOT claim     |
|   on purchases/capital inputs                     |   input VAT credits           |
| • Result: Full tax relief across supply chain     | • Result: Embedded tax costs  |
+---------------------------------------------------+-------------------------------+

Prior to SI 175 of 2026:

• Section 10(1)(f) of the VAT Act already provided zero-rating for supplies of gold to the Reserve Bank of Zimbabwe (RBZ) or banks registered under the Banking Act [Chapter 24:20] in standard unmanufactured/refined forms (bars, ingots, granules, etc.).
• Independent or commercial gold refineries holding dealership licences under the Gold Trade Act [Chapter 22:01] sat in a distinct operational category when sourcing raw gold from miners.

By adding Paragraph 2 to the Second Schedule of the VAT Regulations, supplies of gold made to licensed gold refineries are now explicitly classified as zero-rated taxable supplies.

Direct Tax Implications

Input Tax Recovery for Miners and Suppliers

Under standard VAT rules, registered operators making zero-rated supplies charge 0% output tax on their sales while retaining the right to deduct input tax incurred on goods and services acquired to make those supplies (VAT Act, Section 15).

• Elimination of Tax Cascading: Artisanal, small-scale, and large-scale commercial miners registered for VAT who supply licensed gold refineries will no longer carry unrecoverable input VAT on their operational costs (e.g., equipment, fuel, chemicals, and electricity).
• Cash Flow Enhancement: Because miners charge 0% output VAT when selling to licensed refineries, they avoid inflating the transaction price by the standard VAT rate, ensuring competitiveness and immediate liquidity relief.

Refineries’ VAT Accounting and Refund Dynamics

For licensed gold refineries:

• Output Tax Liabilities: Refineries will receive incoming raw gold at a 0% VAT rate, preventing massive VAT cash outlays upon procurement.
• Refining & Processing Inputs: Refineries incur substantial input VAT on industrial reagents, capital equipment, spare parts, energy, and logistics. Because their primary output (refined gold sold locally or exported) is zero-rated under Section 10(1)(f) or exported under Section 10(1)(a), refineries accrue excess input tax credits.
• Refund Claims: Refineries are eligible to claim input VAT refunds from the Zimbabwe Revenue Authority (ZIMRA) under Section 44 of the VAT Act.

Retroactive Adjustments (Jan 1, 2026 – Oct 30, 2026)

Because the SI operates retroactively from January 1, 2026:

• Tax Invoices & Credit Notes: Registered operators who transacted with licensed refineries between January 1, 2026, and October 30, 2026, under standard-rated or ambiguous tax treatments may need to issue debit/credit notes pursuant to Section 21 of the VAT Act to rectify past accounting periods.
• Audit and Compliance Reconciliation: ZIMRA will require registered operators to verify that refinery counterparties held valid gold dealership licences issued under the Gold Trade Act [Chapter 22:01] at the time of supply to validate zero-rated claims for the retroactive period.

Economic Implications

Levelling the Playing Field in Gold Procurement

Historically, Fidelity Gold Refinery (FGR)—a subsidiary of the Reserve Bank of Zimbabwe—and banking institutions enjoyed structural tax advantages due to Section 10(1)(f) zero-rating. Private or commercial gold refineries operating under dealership licences faced working capital disadvantages if sales to them attracted standard VAT or required complex intermediary structuring.

• Parity Across Procurement Channels: SI 175 of 2026 establishes competitive tax parity between selling gold directly to the central bank/monetary authorities and selling to private/commercial licensed refineries.
• Domestic Beneficiation Incentives: Encouraging local refining capacity aligns with national industrialisation goals. Lowering tax friction on raw material sourcing allows local refineries to expand throughput, upgrade metallurgical infrastructure, and increase value addition before export.

Curbing Illegal Smuggling and Formalising Supply Chains

Gold leakage and informal trading represent ongoing economic challenges in Zimbabwe. Tax frictions at the primary trade level create arbitrary price discounts in the formal sector, driving small-scale miners toward illicit, unrecorded buyers who pay cash without tax deductions.

• Price Net Realisation for Miners: Removing embedded VAT frictions allows licensed refineries to offer more competitive purchase prices directly to miners.
• Formal Sector Volume Expansion: Higher net payouts encourage artisanal and small-scale miners (ASM)—who produce a significant portion of Zimbabwe’s total gold output—to deliver gold through legal channels, increasing overall national delivery metrics.

Macroeconomic Impact: Foreign Exchange and Revenue Dynamics

+-----------------------------------------------------------------------------------+
|                           MACROECONOMIC IMPACT PATHWAY                            |
+-----------------------------------------------------------------------------------+
|  SI 175 Zero-Rating  ──>  Lower Procurement Friction for Refineries               |
|                      ──>  Higher Formal Deliveries from Miners                    |
|                      ──>  Increased Local Beneficiation & Refining Capacity        |
|                      ──>  Enhanced Export Earnings & Reserves Alignment           |
+-----------------------------------------------------------------------------------+

1. Foreign Exchange Generation: Gold is a primary foreign currency earner for Zimbabwe. Expanding the throughput of licensed refineries leads to higher volumes of high-purity gold exports, improving national balance-of-payments positions.
2. Impact on the Consolidated Revenue Fund: In the short term, zero-rating gold supplies to refineries reduces direct net VAT collections on those specific transactions. However, this shortfall is offset by:
   • Increased collections of Royalty Fees, Corporate Income Tax, and Mining Levies resulting from higher formal production volumes.
   • Broader economic spillover from enhanced formal sector liquidity.

Implementation and Compliance Framework

To maintain full compliance under SI 175 of 2026, market participants must observe key statutory requirements:

                        COMPLIANCE CHECKLIST
                        
   [Miners / Suppliers]                     [Gold Refineries]
  ┌───────────────────────┐               ┌───────────────────────┐
  │ • Valid VAT           │               │ • Valid Gold Dealership│
  │   Registration        │               │   Licence (Cap 22:01) │
  │ • Fiscal Tax Invoices │  ───────────► │ • Maintenance of      │
  │   reflecting 0% VAT   │   Supply      │   FDMS Integration    │
  │ • Retention of Proof  │   of Gold     │ • Verification of     │
  │   of Licensing        │               │   Supplier Tax Status │
  └───────────────────────┘               └───────────────────────┘

1. Verification of Dealership Licences: Sellers claiming zero-rated VAT status must verify and maintain documented proof that the buyer holds a valid, active gold dealership licence issued under the Gold Trade Act [Chapter 22:01].
2. Fiscalisation Requirements: Under Section 20 of the VAT Act and Section 63A (Fiscalisation Data Management System – FDMS), all tax invoices issued for zero-rated sales must be recorded electronically via compliant fiscalized registers, featuring valid QR codes and Taxpayer Identification Numbers (TINs).
3. Audit Trail Retention: In accordance with Section 57 of the VAT Act, operators must maintain purchase orders, delivery notes, assay certificates, and deal settlement sheets for a minimum of 6 years.

Conclusion

Statutory Instrument 175 of 2026 represents a pragmatic realignment of Zimbabwe’s indirect tax policy with its broader mineral development strategies. By granting zero-rated VAT status to gold supplied to licensed refineries holding dealership licences under the Gold Trade Act [Chapter 22:01], the regulation removes administrative distortions, enhances liquidity across the mining value chain, and promotes domestic beneficiation.

While requiring careful audit reconciliation for its retroactive period from January 1, 2026, SI 175 ultimately strengthens the formal gold market, supporting improved national gold receipts and fiscal transparency.