High earners, small companies, mobile money users and mining shareholders face a heavier tax load from January 2027. Finance and National Planning Minister Dr Situmbeko Musokotwane has proposed a package of revenue measures expected to raise an extra K10.8 billion. The package…

High earners, small companies, mobile money users and mining shareholders face a heavier tax load from January 2027. Finance and National Planning Minister Dr Situmbeko Musokotwane has proposed a package of revenue measures expected to raise an extra K10.8 billion. The package raises Value Added Tax (VAT) to 16.5 per cent from 16 per cent and adds a new top Pay As You Earn (PAYE) rate of 39.5 per cent. It also lifts corporate income tax on lower-rated income, increases the mobile money levy across all bands and sharply raises duties on plastics.

Dr Musokotwane set out the measures when he presented the K284.8 billion 2027 National Budget to Parliament. He said the successful implementation of the Grow Zambia Agenda required strong, sustainable and predictable domestic revenue. The proposals, he said, would balance support for productive economic activity with the need for individuals and businesses to contribute fairly to national development. The measures would take effect on January 1, 2027.

The new PAYE band is aimed at the top of the income ladder. Individuals earning more than K37,000 a month will pay a top marginal rate of 39.5 per cent on the portion of income above that line. Dr Musokotwane moved to reassure most salaried workers that their payslips would not change under the measure.

“In simple terms, those earning K37,000 per month and below will continue to be taxed under the current regime and will therefore not be affected by this measure. Only the additional income above K37,000 per month will be taxed at 39.5 per cent,” Dr Musokotwane said.

Companies will also pay more. The corporate income tax rate will rise by five percentage points on income currently taxed at 20 per cent and below. VAT moves to 16.5 per cent, which the minister described as part of the Government’s commitment to strengthen domestic revenue mobilisation. Because VAT applies to most goods and services, it will touch nearly every household budget.

Mobile money users will reach deeper into their wallets. The minister proposed to increase the mobile money levy across all bands, so every transaction tier will cost more. For the millions of Zambians who send, receive and save money on their phones, this is likely to be the measure they feel most often.

The mining sector faces a new set of charges. Dr Musokotwane proposed to raise withholding tax on dividends paid by mining companies to 15 per cent from zero, and to introduce a five per cent export duty on zinc concentrates. Mining, mineral processing and exploration licence fees, area charges and related fees will also rise. He said this would align Zambia’s licensing regime with international good practice.

Plastics are the target of the steepest increases in the package. Customs duty on single-use plastics will double to 200 per cent from 100 per cent. An additional duty of K8 per bottle will be introduced on plastic bottles, and the extra duty on selected plastic articles will rise to 30 per cent from 15 per cent. The measures are framed as part of the Government’s environmental sustainability agenda.

A cluster of import duties is designed to shield local industry. Customs duty on imported ceramic tiles will rise to 40 per cent from 25 per cent. Selected imported aluminium bars, rods and profiles will attract a 20 per cent selected goods sales tax and 25 per cent customs duty. The selected goods sales tax on imported meat, including beef, sheep and goat meat, will rise to 30 per cent from 20 per cent.

Shoppers will also see the effect on cooking oil and packaging. Crude soya bean and sunflower oils will attract 15 per cent customs duty and a 10 per cent selected goods sales tax to encourage local production. The selected goods sales tax on imported cement packaging and woven bags will be harmonised at 30 per cent. The minister also proposed ending the customs duty exemption and VAT zero-rating on energy-saving appliances. Second-hand clothing and handbags will be excluded from the duty relief given to approved public benefit organisations.

The package is not all tightening. Dr Musokotwane proposed a 100 per cent customs duty suspension and a VAT exemption on imported raw materials used to manufacture sanitary products locally. Customs duty will also be suspended on safari vehicles, hospitality equipment and communications infrastructure. That relief supports the target of five million international tourist arrivals under President Hakainde Hichilema’s Grow Zambia Agenda.

Small-scale gold miners received a direct incentive to trade through official channels. The minister proposed to cut mineral royalty for artisanal and small-scale miners who sell to Government-approved aggregators to three per cent from six per cent. The measure is meant to pull a largely informal trade into the tax net. It sits alongside plans for a state gold trading agency to aggregate production.

Businesses that report losses year after year will face a narrower minimum alternative tax. Dr Musokotwane said the regime would apply only where a business recorded losses for three consecutive years.

“This will ensure that only businesses with a persistent pattern of loss declaration are brought into the alternative tax net while allowing businesses facing recurring downturns to recover and return to profitability,” Dr Musokotwane said.

The tax drive supports a budget that leans more heavily than ever on money raised at home. Domestic revenues of K233.7 billion will fund 82.1 per cent of spending, up from 58.7 per cent in 2021 and 76 per cent in 2024. Borrowing will account for K41.9 billion and grants from cooperating partners for K9.2 billion. The minister was blunt about the reasoning.

“There are no donors to pay, we must pay ourselves,” Dr Musokotwane said.

Debt remains a heavy claim on that revenue. The Treasury has set aside K67.6 billion for debt service in 2027, made up of K50.8 billion for domestic debt and K16.8 billion for external debt. Debt service sits within K90.5 billion, or 31.8 per cent of the budget, allocated to general public services.

Early reaction from economic and business voices was broadly positive. International Monetary Fund (IMF) Resident Representative for Zambia Dr Reginald Darius described the budget as growth-oriented and said revenue mobilisation would be critical to preserving fiscal stability and debt sustainability. Zambia Association of Manufacturers president Ashu Sagar said the increase in certain taxes was a move to support the social sector. Zambia Chamber of Commerce and Industry (ZACCI) chief executive officer Emmanuel Mumba said the incentives for manufacturing were a plus for local value addition.

To give effect to the measures, Dr Musokotwane proposed amendments to the Income Tax Act, the Customs and Excise Act and the Value Added Tax Act, among other laws. Parliament will now debate the proposals before they take effect in the new year.