Harare, (New Ziana)- Finance, Economic Development and Investment Promotion Minister, Prof. Mthuli Ncube has defended the government’s proposed 15.5% Value Added Tax (VAT) rate, arguing this aligned with regional benchmarks.

Speaking in Parliament, he noted that neighboring countries such as Zambia and Mozambique charged 16 percent VAT, and 18 percent for Tanzania, which placed Zimbabwe’s rate favourably in the region.

He stressed that the adjustment would not burden low-income earners, citing the government’s list of 14 basic commodities that are already zero-rated.

“These commodities consumed by low-income groups have attracted 0% VAT. They are already protected,” he said. “We feel this will not punish our poor citizens.”

Turning to the mining sector, Prof Ncube addressed concerns over the proposal to align mineral royalties with international market prices, including Shanghai and London Metal Exchange benchmarks.

Legislators and industry stakeholders advised that royalties should be linked to only a fraction of these prices, rather than the full market value.

A major point of contention was the plan to impose a 10% royalty on gold when prices exceed US$2,500 per ounce.

Ncube acknowledged the widespread criticism, including submissions from the Chamber of Mines, warning that the rate could become a “negative incentive” for investors.

In response, he confirmed that Treasury will scale back the proposed upper-tier gold royalty.

“We have reviewed this. At the Committee Stage, we are going to reduce the upper end from 10% to something lower,” Ncube announced.

Further details of the revised royalty structure are expected to be presented during the Committee Stage deliberations, he said.

New Ziana