Zambia’s 2027 Budget proposes raising the standard VAT rate from 16% to 16.5% on 1 January 2027
Also targeted VAT exemptions for domestic manufacturing
Finance Minister Situmbeko Musokotwane announced the proposed increase during his 2027 Budget presentation to Parliament on 6 November 2026. The measure forms part of a broader package of tax increases designed to strengthen domestic revenue collection.
The Government expects the new tax measures to generate an additional ZMW 10.8 billion in revenue.
Zambia 2027 VAT changes
The principal VAT proposals include:
- Standard VAT rate: Increase from 16% to 16.5%, effective 1 January 2027.
- Sanitary products: VAT exemption on imported raw materials used in the domestic manufacture of sanitary pads, panty liners and related products.
- Customs relief: Suspension of customs duties on qualifying imported raw materials used in sanitary-product manufacturing.
- Energy-saving appliances: Withdrawal of existing VAT zero-rating and customs duty relief.
The Government is also proposing increases in corporate income tax, personal income tax and selected excise duties.
What does the VAT increase mean for businesses?
The half-percentage-point increase will require VAT-registered businesses to update their tax determination engines, ERP tax codes, invoicing systems and pricing calculations.
Particular attention will be needed for transactions spanning the implementation date, including advance payments, credit notes and invoices relating to supplies made before 1 January 2027.
Businesses using Zambia’s Smart Invoice electronic invoicing system will also need to ensure that the VAT calculated on invoices is consistent with their statutory VAT reporting.
VATCalc’s global legislative tax engine maintains country-specific VAT rates and determination rules, supporting businesses as international VAT legislation changes.
Implementation status
The proposed measures are scheduled to take effect on 1 January 2027, subject to parliamentary approval and enactment of the necessary amendments to Zambia’s VAT legislation.
Businesses should monitor publication of the final legislation before implementing the new rate.
