The proposal comes amid striking discrepancies in international trade records, including data showing the United Arab Emirates reporting almost $1.8 billion in gold imports from Zambia in 2023 while Zambia recorded only a fraction of that amount as direct exports to the Gulf state.
Hapenga Kabeta, Permanent Secretary in Zambia’s Ministry of Mines and Minerals Development, said the government was considering reducing VAT to make it easier for artisanal and small-scale miners to trade gold through formal channels, according to local media reports.
The discussion followed a meeting with representatives of the World Gold Council, where Grant Crosse, a member of the organisation, called for the 16% VAT to be reduced.
Crosse estimated that Zambia could be missing between $80 million and $240 million in mineral royalties because much of its gold sector remains outside formal channels.
The potential tax change comes as Zambia tries to transform gold into a more important source of government revenue alongside copper, the commodity that has long dominated the country’s mining industry and export earnings.
Trade figures reveal a much bigger gold flow
The challenge facing Lusaka is illustrated by large differences between Zambia’s export records and data reported by some of its trading partners.
World Bank WITS data based on UN Comtrade show Zambia reported only about $61,800 worth of unwrought non-monetary gold exports to the UAE in 2023.
However, UAE trade data for the same product category recorded nearly $1.79 billion of imports originating from Zambia during the year.
The difference does not necessarily mean that $1.79 billion of Zambian gold was smuggled or went unreported.
Mirror-trade discrepancies can arise from differences in valuation, reporting periods, transit routes and the way exporting and importing countries record a product’s country of origin.
But the size of the gap highlights the difficulty Zambia faces in tracking gold moving through the country and ensuring that taxes and royalties are collected from the trade.
The problem is particularly important because Zambia sits next to the Democratic Republic of Congo, one of Africa’s major mineral producers, where authorities are also trying to bring artisanal gold into formal trading channels.
Zambia could be leaving millions on the table
Gold classified as a precious metal is currently subject to a 6% mineral royalty in Zambia.
The Zambia Revenue Authority requires mining licence holders and artisanal mining-right holders to pay mineral royalties, while people found in possession of locally extracted minerals on which royalties have not been paid can also become liable for the tax.
The government has already experimented with changing taxes on precious metals to encourage formal trade.
In its 2025 budget, Zambia proposed a 15% export duty on gemstones and precious metals as part of efforts to raise domestic revenue.
The government later suspended the duty after industry participants argued that exporters would face both the 15% export tax and the existing 6% mineral royalty, making Zambian minerals less competitive internationally.
Finance Minister Situmbeko Musokotwane told parliament in February 2025 that the government had initially expected the export duty to generate about K250 million in additional revenue.
Authorities ultimately concluded that the measure risked discouraging production and investment, which could also reduce mineral royalty and corporate income tax collections.
The latest consideration of a lower VAT suggests Zambia is again trying to find a balance between taxing gold and creating enough incentive for miners and traders to remain inside the formal market.
Gold takes a bigger place in Zambia’s mining ambitions
The push comes as Zambia tries to develop a gold industry that has historically been overshadowed by copper.
Official US Geological Survey data show gold accounted for about 2% of Zambia’s goods exports in 2024, worth roughly $262 million, while copper alone generated about $7.5 billion.
Yet international trade records suggest the amount of gold moving through Zambia or being declared elsewhere as Zambian-origin metal may be considerably larger than domestic production and export statistics indicate.
Formalising artisanal mining and gold trading could therefore give the government a clearer picture of the industry while expanding its tax base.
Source: Africabusinessinsider