Zimbabwe’s Consolidated Fiscal Strategy: Analyzing the Proposed Finance Bill, 2025 and Revenue Measures
The Finance Bill, 2025 (the Bill) legislates key tax and revenue proposals for the 2026 fiscal year, complementing a broader set of policy measures announced in the budget statement. This consolidated strategy focuses on maximizing revenue from the mining sector through beneficiation incentives, modernizing international tax compliance, and expanding the domestic tax base through rigorous enforcement on the informal sector and digital economy.
I. Value Added Tax (VAT) and Currency Adjustments
The tax framework introduces immediate rate proposals and structural changes to VAT collection, focusing on closing avoidance loopholes.
| VAT Proposal (Budget) | Bill Provision (Legislation) | Effective Date | Detail |
| Standard VAT Rate Increase | Not explicitly in Bill. | Proposed | Proposed increase from 15% to 15.5% to generate additional revenue. |
| Digital Services WHT | Not explicitly in Bill. | Proposed | Proposed 15% Digital Services Withholding Tax to simplify collection from non-resident digital platforms (e.g., e-hailing, online content), replacing the existing VAT on imported services for these supplies. |
| Splitting of Supplies | VAT on Entertainment (Section 21): Exempt or zero-rated supplies provided as part of “entertainment” must be treated as a single supply and charged at the standard VAT rate. | January 1, 2026 | Prevents the artificial division of packages (e.g., separating food and lodging) to avoid VAT liability. |
| Currency of Payment | Payment in Foreign Currency (Section 24): VAT on imported services must be paid in United States dollars (or equivalent foreign currency). | January 1, 2026 | Enforces the use of foreign currency for certain transactional taxes, managing foreign exchange demand. |
II. Intermediated Money Transfer Tax (IMTT) and Cash Levies
Measures are proposed to manage currency flows and encourage the use of the new local currency, the Zimbabwe Gold (ZiG), and formal digital channels.
| Measure | Bill Provision (Legislation) | Detail |
| Deductibility of IMTT | Not explicitly in Bill. | Proposal to allow businesses to Deduct IMTT as an allowable deduction |
| Local Currency IMTT Reduction | Not explicitly in Bill. | Proposed reduction in IMTT on local currency (ZiG) transactions from 2% to 1.5% to promote its use. |
| Foreign Currency IMTT | Not explicitly in Bill. | IMTT on foreign currency transactions remains unchanged at 2%. |
| Mutapa Fund Exemption | IMTT Exemption (Section 19): Transfers of funds from the Mutapa Investment Fund to the Government, its subsidiaries, and listed entities are exempt from IMTT. | January 1, 2025 |
| Progressive Cash Withdrawal Levy | Not explicitly in Bill. | Proposed progressive levy on foreign currency cash withdrawals: 2% on withdrawals above US$500 and 3% on withdrawals above US$1,001. The levy will not apply to ZiG withdrawals. |
III. Mining Sector Tax Changes: Beneficiation and Royalties
The core of the Bill’s revenue measures targets the extractive industry to enforce value addition and maximize state returns during periods of high commodity prices.
| Measure | Bill Provision (Legislation) | Effective Date | Detail |
| Tiered Gold Royalties | Sliding Scale Gold Royalty (Section 30): Replaces the flat rate with a tiered structure based on the London Bullion Market Association (LBMA) price. | January 1, 2026 | 3% if price $\le$ US$1,200/oz; 5% if price $>$ US$1,200/oz but $<$ US$2,500/oz; 10% if price $\ge$ US$2,500/oz. |
| Export Tax on Un-beneficiated Minerals | Lithium Export Tax (Section 22): Introduces tiered tax rates based on the level of processing. | January 1, 2026 | 10% for lithium ore; 5% for lithium concentrate; 0% for lithium sulphate (fully beneficiated). |
| Chrome Export Tax (Section 23): Imposes a new 5% tax on the value of unbeneficiated chrome exports. | January 1, 2026 | Aims to drive investment into local ferro-chrome smelting. | |
| Corporate Social Responsibility Levy | Mineral Levy Scope (Section 3, 10): The existing levy on the gross value of certain minerals is formally extended to include coal. | January 1, 2026 | Broadens the tax base for mineral levies, which traditionally fund various development projects. |
| Gold Trade Integrity | Tampering with Gold Bars (Section 34): Creates a severe offense for altering, defacing, or smelting authorised gold bars, punishable by up to 15 years imprisonment. | January 1, 2026 | Protects the integrity and traceability of gold produced by the National Gold Refinery. |
IV. Corporate and Income Tax Measures
These proposals focus on international compliance, domestic tax enforcement, and restricting deductions.
| Measure | Bill Provision (Legislation) | Effective Date | Detail |
| Domestic Minimum Top-Up Tax (DMTT) | Minimum 15% Tax (Section 5): Defines “high-earning foreign entities” (MNCs with $\ge$760 million Euros turnover) and mandates a minimum effective tax rate of 15% on their Zimbabwean taxable income, aligned with global Pillar 2 rules. | January 1, 2026 | Aims to secure a baseline tax take from large multinational corporations operating locally. |
| Non-Resident Tax on Interest | 15% Interest Withholding Tax (Section 2, 9, 16): Imposes a new non-residents’ tax on interest sourced in Zimbabwe at a rate of 15%. | January 1, 2026 | Closes a leakage point for passive income flowing out of the country. |
| Limitation of Losses | Mining Loss Restriction (Section 6): Assessed losses carried forward by persons engaged in mining operations are restricted to only 30% of the assessed loss. | January 1, 2026 | Limits the indefinite carry-forward of substantial mining losses to reduce long-term tax avoidance. |
| Presumptive Tax Enforcement | 10% Presumptive Rental Tax (Section 4, 11): Imposes a 10% presumptive taxpayer rental tax on landlords (“registrable proprietors”) renting space to presumptive taxpayers (informal sector). | January 1, 2026 | Directly forces formal sector players (landlords) to act as withholding agents for the hard-to-tax informal sector, significantly broadening the tax base. |
| Taxation of Dividends (Banking) | Not explicitly in Bill. | Proposed | General measure proposed to review the taxation of dividends accruing to the banking sector, possibly as part of broader financial stability and revenue mobilization efforts. |
| Transfer Pricing | Quoted Price Method (Section 20): Mandates the use of the Quoted Price Method, referencing exchanges like the LBMA and LME, for pricing exported minerals. | January 1, 2026 | Ensures that mineral export prices used for tax calculations reflect true international market values. |
V. Other Significant Fiscal and Compliance Measures
| Measure | Detail |
| Betting Tax Enhancement | Proposal to enhance the betting tax framework to capture more revenue from the growing gaming and betting industry. |
| Beverages Sugar Content Tax | The existing tax is proposed for review to include artificial sweeteners, thereby expanding the tax base beyond traditional sugar-sweetened beverages to address public health concerns. |
| Electronic Commerce | Enhanced taxation measures are proposed to capture the growing digital economy, related to the Digital Services WHT and general digital compliance efforts. |
| Capital Gains Tax (CGT) on Land Entities | New 20% CGT (Section 28): Introduces a 20% CGT on the transfer of shares or interests in a “land-holding entity,” specifically targeting transactions concluded outside Zimbabwe and retroactively effective from January 1, 2024. |
| TCC Relief and Dispute Resolution (Section 12) | New registrants to professions are exempt from the TCC requirement. A temporary Tax Clearance Certificate must be issued by ZIMRA during a tax dispute or appeal to allow the professional to continue working. |
| Public Procurement Enforcement (Part VII) | The Secretary for Finance can issue an interim 90-day suspension order against suppliers who consistently fail to meet the terms of government contracts, promoting greater public sector efficiency. |
