• Zimbabwe’s 2026 Budget imposes the most aggressive mining tax overhaul since dollarisation: 10% gold royalty, Quoted Price valuation, capped loss carry-forwards and more
• Buried in the package, a historic liberalisation ends the 44-year state monopoly by legalising private ownership and free trading of certified refined gold bars for all citizens.
• While higher taxes risk deterring formal investment, the gold-trading reform alone could pull billions in leaked metal back into the taxed economy

Harare- Finance, Economic Development and Investor Promotion Minister, Professor Mthuli Ncube has tabled the most aggressive mining tax reforms since dollarisation, aimed at lifting the sector’s effective contribution from a persistent 14% to levels more in line with its over 60% share of export earnings.

The mining sector stands at the forefront of the nation's economic agenda, contributing approximately 12% to the country's GDP and over 60% of export earnings. With mineral exports surging to an estimated US$6,5 billion in 2025 and projected to surpass US$7 billion in 2026, driven largely by gold, platinum group metals (PGMs), lithium, and chrome, the government is targeting a significant uplift in fiscal revenues from the sector.

Currently, mining's effective tax rate hovers at just 14%, with gross revenues of US$5.495 billion in 2024 yielding only US$747 million in taxes, far below potential given global commodity booms.

The 2026 Budget aims to close this gap, potentially adding hundreds of millions in US dollars annually to the fiscus through enhanced transparency, value addition, and risk-sharing mechanisms.

The policies implemented in the 2026 Budget include the Quoted Price Method for mineral exports, a tiered royalty regime for gold, limitations on losses carried forward, revised deductibility of capital expenditure, export taxes on un-beneficiated minerals (covering lithium, antimony, black granite, and chrome), and a new Corporate Social Responsibility Levy on coal.

These measures represent a profound shift from Zimbabwe's historically investor-friendly but revenue-leaky fiscal framework, drawing inspiration from regional peers like South Africa and Ghana amid rising global scrutiny on resource nationalism. While they promise to boost government coffers and promote local beneficiation, they carry risks of reduced foreign investment, higher operational costs for miners, and potential short-term production slowdowns, consequences that could ripple through supply chains, employment, and export performance.

Liberalisation of Gold Trading and Possession

The 2026 National Budget Statement proposes a historic amendment to the Gold Trade Act by expanding legal possession and trading of refined gold beyond the current restrictive circle of licensed miners, Fidelity, and permit holders. Authorised refiners, registered dealers, and ordinary citizens will soon be allowed to lawfully own, pledge, barter, sell, or exchange certified investment-grade gold bars issued by accredited entities, effectively ending the de facto state monopoly on physical gold circulation outside the mining chain.

This liberalisation is the single most constructive and market-friendly measure in an otherwise punitive 2026 mining tax package. By creating a legal, traceable retail gold market for the first time since independence, the reform directly attacks the root cause of Zimbabwe’s chronic gold smuggling: citizens and small-scale miners have never had a safe, legal way to hold or monetise refined gold domestically, so metal inevitably leaks across borders or into the black market.

Certified bars that can be stored under the mattress, used as loan collateral at banks, traded peer-to-peer, or resold at any jeweller or dealer will pull billions of dollars’ worth of hoarded and smuggled gold back into the formal system. Fidelity deliveries, already rising from 2023–2025 monetary incentives, are likely to surge further as artisanal miners realise that only refinery-certified metal will enjoy full liquidity and legal protection.

The policy also opens the door to gold-backed savings accounts, exchange-traded gold receipts, and small-denomination bars (10 g–100 g), giving Zimbabweans a genuine hedge against ZiG volatility and inflation without forcing them to break the law. In one stroke, Harare could achieve what no royalty hike or border patrol ever has: converting the informal 65–70 % of gold production into taxed, bankable, and investable assets while simultaneously deepening domestic capital markets and restoring confidence that Zimbabwe is serious about becoming a modern gold jurisdiction rather than just a raw-ore exporter. If the enabling regulations are clear, light-touch, and issued before mid-2026, this liberalisation alone has the potential to outweigh most of the revenue losses risked by the Budget’s heavier-handed measures elsewhere.

Quoted Price Method for Mineral Exports

The Quoted Price Method mandates that, from January 1, 2026, all mineral exports be valued using publicly quoted international benchmark prices from platforms like the London Metal Exchange, Metal Bulletin, and Shanghai Metals Market as the primary transfer pricing rule, overriding opaque related-party transactions and undervalued contracts.

This policy means mining companies must declare export values based on transparent global market rates rather than negotiated intra-group prices, directly addressing profit-shifting tactics where minerals are sold cheaply to affiliates abroad to minimize taxable income in Zimbabwe.

Previously, the system relied on self-declared values and complex contracts, often leading to undervaluation, exacerbated by limited auditing capacity and loopholes in the Mines and Minerals Act, which allowed schemes like market price adjustments and intercompany agreements to flourish. Estimates suggest illicit financial flows from mining have cost Zimbabwe up to US$3 billion annually in lost revenues, with government figures at 1.2 billion from gold leekages alone.

What this will mean is a tighter valuation protocol that enhances tax accuracy and reduces evasion, potentially increasing corporate income tax and royalties by 20-30% on high-value exports like platinum and gold, based on similar reforms elsewhere.

For the country, the benefits are substantial: boosted fiscal revenues could fund NDS2 priorities, while curbing capital flight strengthens the ZiG's stability and improves Zimbabwe's attractiveness for ethical investors. However, if not balanced with incentives, it might deter new explorations amid global competition from lower-tax jurisdictions like Botswana.

Tiered Royalty Regime for Gold

Effective January 1, 2026, the government has introduced a harmonised sliding-scale royalty that is applied differently in practice: large-scale miners (LSM) now face rates of 3%, 5%, and 10% (the 10% tier is triggered at the current gold price of over US$4,000/oz), while artisanal and small-scale miners (ASGM) continue to enjoy the old preferential rate of just 1–2% regardless of price.

Large-scale miners, the ones who already pay full corporate income tax, surrender 30% of their forex in ZiG, run extensive CSR programmes, employ thousands of workers on the payroll (generating PAYE and NSSA revenue), invest in beneficiation and environmental rehabilitation, are now being singled out for a royalty that has effectively doubled from 5% to 10%.

Meanwhile, the ASGM sector, which pays virtually no corporate tax, no meaningful VAT, no structured community contributions yet producing the most gold, and leaks billions through smuggling, continues to operate on a token 1–2% royalty.

The result is deeply unfair and counter-productive. The government is raising the tax burden only on the compliant, transparent 30–35% of production that actually reaches the fiscus in full, while deliberately leaving the dominant informal 65–70% almost untouched. This upside-down approach will raise far less revenue than if the Treasury had kept LSM rates moderate (or even reduced them to encourage expansion) and instead raised the enforceable ASGM rate to a still-affordable 5–7% backed by real monitoring and prompt USD payments at Fidelity. Taxing the wrong end of the sector,  the end that already pays, while continuing to mollycoddle the end that pays almost nothing is not fiscal reform; it is penalising success and rewarding leakage.

Limitation of Losses Carried Forward

From the 2026 assessment year, mining losses can only be deducted at a maximum of 30% per annum against current profits, ending the indefinite full carry-forward.

This policy caps how quickly losses offset taxes, meaning companies can't perpetually defer payments by accumulating artificial deficits from intra-group charges or asset revaluations, aligning deductions with production cycles. Previously, indefinite carry-forwards under the Income Tax Act allowed mines to remain "unprofitable" on paper for years, even during lucrative phases, deferring corporate income tax and straining fiscal predictability despite long gestation periods in mining projects.

What this will mean is accelerated tax inflows, enhancing budget stability and potentially unlocking US$100-150 million in deferred revenues annually from profitable operations. For companies, it tightens cash flows, especially for greenfield projects like lithium ventures, possibly delaying break-even points and deterring high-risk investors.

Established firms like Zimplats may adapt via better financial planning, but juniors could exit. For the country, it shares risks more equitably, funding arrears clearance and growth initiatives, while signalling maturity in tax policy akin to South Africa's 80% cap.

Deductibility of Capital Expenditure

Effective 2026, full immediate deductions for exploration, development, and capital costs are replaced with allowances spread over the asset's or mine's life.

This means capital redemption claims are now depreciated gradually, rather than front-loaded, to prevent rapid tax shields that defer government revenues until late in a mine's life.

Prior practice allowed 100% write-offs in the year incurred if "wholly and exclusively" for mining, accelerating investor recovery but shifting fiscal risks to the state amid potential future revenue drops.

The implications include shared upfront risks, with earlier tax collections bolstering the fiscus during booms and potentially adding US$50-100 million yearly from capex-heavy sectors like PGMs. Companies face higher initial tax burdens, impacting liquidity for expansions, which could slow projects like Bikita Minerals' lithium upgrades.

Export Tax on Un-beneficiated Minerals

From January 1, 2026, a tiered or flat export tax applies: 10% on lithium ore/concentrate (0% on beneficiated sulphate), 10% on antimony products, tax on black granite based on cut/polished value, and 5% on chrome based on ferro-chrome value, all payable in foreign currency.

This policy penalises raw exports to incentivize local processing, meaning miners pay heavily unless they add value domestically, targeting forfeiture of beneficiation opportunities. Previously, no such taxes existed for these minerals, allowing unprocessed exports under minimal royalties, leading to lost jobs and revenues despite investments in plants.

What this will mean is forced industrialization, potentially creating thousands of processing jobs and retaining 10-20% more value in-country. For lithium companies like Prospect Resources, it accelerates beneficiation but hikes costs for raw exporters. Antimony, granite (and chrome firms face similar pressures, with Zimasco possibly expanding smelters.

Corporate Social Responsibility Levy on Coal

A 2% levy on coal sales revenue takes effect January 1, 2026, aligning coal with existing levies on lithium, granite, and quarry stones.

This means coal producers must contribute directly to community and environmental initiatives, calculated on revenues to fund local projects. Before, coal was exempt, despite environmental impacts in areas like Hwange, with CSR often voluntary and inconsistent under the Indigenisation Act remnants.

The implications are mandatory social investments, potentially US$20-50 million annually for rehabilitation and infrastructure. For companies like Hwange Colliery, it's a minor cost addition (2%) but enhances licenses to operate, reducing conflicts.

Therefore, Zimbabwe’s 2026 mining tax reforms are a double-edged sword, a barrage of revenue-grabbing measures (Quoted Price valuation, 10% gold royalties on large-scale producers, capped loss carry-forwards, deferred capex, raw-mineral export taxes, new levies) will sharply raise the fiscal take and force beneficiation, yet risk scaring off formal investment. Buried in the same Budget, however, is one brilliantly liberal move: ending the state monopoly by legalising citizens’ ownership and free trading of certified refined gold bars. This single reform could achieve what no crackdown ever has, pull billions in smuggled and hoarded gold into the formal, taxed economy, boost Fidelity deliveries, deepen local savings, and give every Zimbabwean a legal inflation hedge. If swiftly implemented, the gold-trading liberalisation may prove far more valuable than all the punitive taxes combined, potentially turning a nationalist squeeze into sustainable mining revival.

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