Budget speech
Key Tax Proposals in the 2026 National Budget:
- Gold Royalty Rates:
- Revised royalty structure for gold producers based on price per ounce:
- 0 to $1,200: 3%
- $1,201 to $2,500: 5%
- Above $2,501: 10%
- Revised royalty structure for gold producers based on price per ounce:
- Digital Services Withholding Tax:
- Introduction of a tax on payments made to offshore digital platforms, including e-hailing fees, online content charges, and satellite-based internet access fees.
- The tax will be withheld by paying agents such as financial institutions.
- Intermediated Money Transfer Tax (IMTT):
- Reduction of IMTT rate on ZiG-denominated transactions from 2% to 1.5% to promote local currency usage.
- IMTT on foreign currency transactions remains at 2%.
- IMTT designated as a tax-deductible expense for Corporate Income Tax computation.
- Expansion of the definition of "Financial Institution" for IMTT to include Microfinance Institutions.
- Value Added Tax (VAT):
- VAT rate increased by 0.5% to 15.5%, effective 1 January 2026.
- Tax Incentives for a 24-Hour Economy:
- Additional tax deductions for selected expenditures during extended operational hours.
- Accelerated wear-and-tear allowances for plant and equipment used in round-the-clock production cycles.
- Priority access to import duty concessions for firms demonstrating capacity for expansion or productivity improvements.
- Customs Duty Adjustments:
- Cotton to Clothing Value Chain: Customs duty rate on selected polyester staple fibers aligned with dyed woven fabrics of cotton at 40% + US$2.50 per kg.
- Gas Cylinder Production: Removal of customs duty on selected imported raw materials like steel coils and plates to reduce production costs.
- Tax Relief for Business and Knowledge Process Outsourcing (BKPO):
- Suspension of customs duty on specified equipment for BKPO operators.
- Flat 15% Corporate Income Tax rate for qualifying BKPO operators.
- Capital allowance deduction of 100% in the first year of use.
- Exemption from Non-Residents Tax on Dividends.
- Tax credit of US$1,500 per employee per annum under the Youth Employment Tax Incentive (YETI) framework.
- Flat tax rate of 15% for skilled essential expatriate staff.
- Tax Deductibility of Interest for Commercial Banks:
- Interest expenses payable on deposits made with financial institutions allowed as tax-deductible expenditure, subject to safeguards like transfer pricing rules and anti-base erosion measures.
These measures aim to broaden the tax base, support productive sectors, provide tax relief, and promote economic growth and inclusivity.