Introduction
Taxation plays a critical role in national development, enabling governments to fund public services, infrastructure, and social programs. In Zimbabwe, as in many developing countries, tax revenue is a primary source of government financing. With fiscal sustainability and economic resilience in focus, recent amendments to Zimbabwe’s tax framework reflect the government’s drive to enhance compliance, increase collections, and align taxation with national goals such as health promotion, environmental sustainability, and industrial growth.
1. Income Tax Reforms
Zimbabwe maintains a source-based taxation system, meaning income earned within or deemed to be within Zimbabwe is subject to taxation, regardless of residency.
Key Updates:
- Standard Income Tax Rate: Individuals and incorporated businesses are taxed at 25%.
- ZIG-Based Payment: Following the introduction of the Zimbabwe Gold (ZIG) currency, taxpayers may now remit income tax liabilities in ZIG for salaries earned in the same.
- Non-Residents: Taxed only on Zimbabwe-source income and subject to withholding tax (WHT), which may be reduced under a Double Taxation Agreement (DTA).
- Residential Property Converted to Commercial Use: These properties now attract a 25% tax on rental income, ensuring parity with commercial landlords.
2. Value Added Tax (VAT)
VAT in Zimbabwe is governed by the Value Added Tax Act [Chapter 23:12] and is imposed at a standard rate of 15% on the supply and importation of taxable goods and services.
Recent Changes:
- Payment Deadline Adjustment: VAT payments are now due by the 15th of the following month, changed from the 25th. This accelerates revenue collection to meet expenditure needs more promptly.
- Automatic VAT Registration: Any business submitting tenders above USD 25,000 is automatically registered for VAT, promoting compliance among high-value suppliers.
VAT Exemptions:
- Liquefied Petroleum Gas (LPG) is now VAT-exempt to encourage safe, clean energy use.
- Basic groceries, educational materials, and select medical products remain exempt.
3. Betting, Gaming & Entertainment Taxes
To regulate the growing betting industry and promote responsible gambling, the government introduced sector-specific taxes:
- Winnings Tax: A 10% WHT is deducted directly from betting winnings and remitted by betting operators.
- Operators’ Tax: Betting houses pay 3% of gross monthly income.
Bookmaker and Punter Tax:
- 3% on gross receipts (bookmakers).
- 10% on punters’ gross winnings.
This approach aligns with international standards where gambling earnings are treated as taxable income.
4. Excise and Consumption-Based Taxes
v Fast Foods Tax
A new 1% levy applies to fast food sales (e.g., pizza, burgers, fries), introduced to discourage unhealthy eating habits and incentivize healthy alternatives.
v Plastic Bag Tax
A 20% tax on the sale value of each disposable plastic carrier bag produced is now in place to promote biodegradable substitutes and environmental protection.
v Alcohol Excise Duty
The excise duty on certain alcoholic beverages increased from 25 cents to 30 cents per litre to boost revenue and curb excessive alcohol consumption.
5. Capital Gains Tax (CGT)
CGT is levied on gains from the sale of immovable property or marketable securities.
Updates:
- Marketable Securities CGT: Reduced from 2% to 1%.
- Special CGT on Mining Titles: Effective from January 1, 2024, any transfer of mineral titles (domestic or international) is subject to CGT to prevent capital flight and ensure state benefit from mineral assets.
6. Mining Tax and Royalties
Zimbabwe’s mining sector has seen significant reforms aimed at enhancing transparency and boosting public benefit from mineral wealth.
Key Developments:
- Mandatory ZIMRA Registration: All mining entities must register with ZIMRA before acquiring, transferring, or disposing of mining titles.
- Capital Gains on Mining Property Transfers: Transfers of mineral assets are subject to CGT regardless of whether ownership changes occur within or outside Zimbabwe.
- Expanded Definitions: The terms “beneficial owner” and “controller” now encompass indirect or informal influencers of mining companies to close compliance loopholes.
- Penalty Framework: Late royalty payments now attract penalties even if the company faces ongoing legal proceedings.
Royalty Rates (Updated 2025):
| Mineral | New Royalty Rate |
| Coal | 2% (from 1%) |
| Black Granite | 2% (unchanged) |
| Lithium | 2% (new rate) |
| Dimensional Stones | 0.5% (reduced) |
| Quarry Stones | 0.5% (new rate) |
Payment Structure for Precious Minerals:
- 50% in mineral form
- 40% in local currency (ZIG)
- 10% in foreign currency
7. Special Economic Zones (SEZs)
To enhance consistency and prevent tax base erosion, the previously granted tax holidays for SEZs have been replaced with structured incentives:
- Corporate Tax Rate: 15% for businesses operating in SEZs (revised from full tax exemption).
- Withholding Tax: Reduced from 15% to 10% to stimulate investment while maintaining government revenue.
8. Challenges in Revenue Collection
Despite these reforms, Zimbabwe still faces hurdles in achieving effective taxation, including:
- Low levels of tax education among individuals and SMEs.
- Ineffective taxpayer identification and monitoring systems.
- Corruption and administrative inefficiencies within tax enforcement bodies.
Conclusion
The 2025 tax reforms signal a decisive shift in Zimbabwe’s fiscal policy, reflecting a broader goal of mobilizing domestic resources, reducing inequalities, promoting sustainability, and aligning with development objectives. Key strategies include closing loopholes in mining, regulating betting, discouraging unhealthy or environmentally harmful behaviors, and enhancing VAT efficiency.
However, for Zimbabwe to fully realize the potential of these tax reforms, systemic challenges—especially around taxpayer education, compliance enforcement, and institutional integrity—must be addressed.
