Zimbabwe 2026 Tax Reforms: VAT Rise and Digital Services Tax

In its 2026 National Budget Speech, Zimbabwe’s Ministry of Finance, Economic Development, and Investment Promotion (MoFEDIP) proposed several changes to the tax and duty regulations, including raising the VAT rate, introducing withholding tax on imported digital services, and removing customs duties on certain raw materials. The 2026 National Budget Speech has been presented to members of Parliament and awaits final approval and enactment.

Key Proposed Amendments

As proposed by the MoFEDIP, starting from January 1, 2026, several VAT rules are set to change across different sectors. One of the most important proposed changes is an increase in the standard VAT rate by 0.5%, from 15% to 15.5%, which, if adopted, will take effect on January 1, 2026. Another proposed change refers to mixed entertainment packages, meaning those that include goods or services, which will now be treated as fully standard-rated supplies. 

Furthermore, lithium exports will be taxed based on their stage of processing. Therefore, raw lithium ore will be taxed at 10%, lithium concentrate at 5%, and lithium sulphate will remain zero-rated. Similarly, unbeneficiated chrome exports, including ores and concentrates, will be subject to a 5% VAT, calculated using either market prices or export document values. 

Notably, all export-related VAT on lithium, chrome, platinum, hides, dimensional stones, and medicinal cannabis will be paid in US dollars or equivalent foreign currency. Also, VAT on certain imported services will be paid in foreign currency, applying to all standard-rate services. 

The MoFEDIP also proposed introducing the Digital Services Withholding Tax (DSWT), which should replace VAT on imported services and apply to payments made to non-resident digital platforms, including e-hailing fees, online content charges, and satellite-based internet access fees.

Conclusion

The 2026 National Budget, themed “Enhancing Drivers of Economic Growth and Transformation Towards Vision 2030”, signals a significant shift in the country’s tax framework, reflecting a broader effort to modernize revenue collection and align taxation with evolving economic activities and the digital economy. 

Once enacted, the proposed measure should result in increased fiscal efficiency, improved compliance, and a more efficient and transparent system that captures both traditional and digital economic activities while supporting strategic resource management and foreign exchange stability.

Source: The 2026 National Budget Speech, KPMG