Zambia weighs lower gold VAT as $1.8bn trade mismatch exposes informal flows

Zambia is considering a reduction in value-added tax on gold after international trade data revealed a striking mismatch: the United Arab Emirates reported almost $1.8bn in gold imports from Zambia in 2023, while Zambia recorded only about $61,800 in exports. The discrepancy has renewed pressure to bring artisanal miners and traders into the formal economy.

Key takeaways

  • Zambia is reviewing its 16% VAT on gold transactions.
  • The UAE reported nearly $1.8bn in Zambian gold imports in 2023, versus Zambia’s recorded exports of about $61,800.
  • The World Gold Council estimates the country could be losing $80m–$240m in mineral royalties.
  • Gold remains far smaller than copper in Zambia’s official export figures.

Tax reform aims to bring more gold into the formal market

Hapenga Kabeta, permanent secretary in Zambia’s Ministry of Mines and Minerals Development, said the government was considering lowering VAT to make official gold trading more attractive to artisanal and small-scale miners. The proposal followed discussions with the World Gold Council, whose representative Grant Crosse called for a reduction in the 16% levy.

The policy challenge is familiar to market participants: a tax that is too high can push activity outside regulated channels, reducing the revenue ultimately collected. For traders assessing firms or platforms, the same principle applies to evaluating rules such as maximum loss limits and payout structures—headline terms matter, but incentives and execution determine behaviour.

Trade data points to a large reporting gap

World Bank WITS data, based on UN Comtrade records, show Zambia reporting roughly $61,800 in unwrought non-monetary gold exports to the UAE in 2023. UAE records for the same category listed imports worth nearly $1.79bn originating from Zambia.

The gap is not conclusive proof that all the gold was smuggled or omitted from Zambian records. Differences can result from valuation methods, reporting periods, transit routes and rules governing a product’s country of origin. Nevertheless, the scale of the mismatch underlines how difficult it is for Lusaka to track gold flows and collect taxes and royalties.

Zambia’s location beside the Democratic Republic of Congo, another major mineral producer, adds to the complexity. Gold may cross borders through informal networks before reaching international trading centres.

Royalty revenue is also at stake

Gold classified as a precious metal currently attracts a 6% mineral royalty in Zambia. Mining licence holders and artisanal mining-right holders are responsible for the payment, while others possessing locally extracted minerals without settled royalties may also become liable.

Crosse estimates that Zambia could be missing between $80m and $240m in mineral royalties because much of the sector remains informal. A lower VAT rate could reduce the incentive to avoid official buyers, although its success would depend on enforcement, reliable weighing and transparent pricing.

Zambia is balancing revenue with competitiveness

The government’s recent tax experience shows the difficulty of raising revenue without undermining production. Its 2025 budget proposed a 15% export duty on gemstones and precious metals, but the measure was later suspended after industry participants warned that it would sit alongside the 6% royalty and weaken Zambia’s competitiveness.

Finance minister Situmbeko Musokotwane said the duty had initially been expected to raise about K250m. Authorities ultimately judged that it could discourage investment and reduce collections from royalties and corporate income tax.

Gold gains importance alongside copper

Gold represented about 2% of Zambia’s goods exports in 2024, valued at roughly $262m, compared with approximately $7.5bn from copper. Formalising gold production could therefore diversify government revenue while giving policymakers a clearer view of the industry.

The Lusaka Securities Exchange is also preparing the country’s first gold exchange-traded fund, signalling growing interest in regulated exposure to the metal. As with comparing Classic and Rapid evaluations, traders should focus on the underlying mechanics rather than the headline opportunity: Zambia’s outcome will depend on whether lower taxes create measurable formal activity and verifiable revenue.

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