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Mineral Royalty in Zambia: A Tax Perspective
Tax Planning

Mineral Royalty in Zambia: A Tax Perspective

January 1, 2026•3 min read

Zambia's mining sector is subject to a tax-royalty fiscal regime, where mineral royalty tax (MRT) serves as a key revenue instrument alongside corporate income tax (CIT) and other levies. This approach prioritizes upfront royalties on production value, making them easier to administer than profit-based taxes, while CIT captures profits. As of December 2025, the regime balances revenue generation with investor attractiveness, following reforms that enhanced deductibility and stability.

Key Components of the Mining Tax Regime

The primary taxes on mining operations include:

  • Mineral Royalty Tax (MRT): A non-profit-based levy on the value of minerals extracted, payable regardless of profitability. It is administered by the Zambia Revenue Authority (ZRA) and forms the bulk of early-stage government revenue from mining.

  • Corporate Income Tax (CIT): Applied at 30% on taxable mining income (base metals and industrial minerals). Income solely from mineral processing is also taxed at 30%.

  • Other Levies: Include withholding taxes, property transfer tax (PTT) on mining rights transfers (10% on mining licenses effective January 2025), and import/export duties (though a 15% export duty on precious stones/metals imposed in 2025 was revoked shortly after).

A significant reform effective from January 2022 allows MRT to be fully deductible when calculating taxable income for CIT purposes. This reduces the effective tax burden, avoids double taxation, and aligns with international best practices, encouraging investment and expansion.

Current Mineral Royalty Rates (as of 2025)

Rates remain unchanged from recent years and are calculated on either norm value (international benchmark prices) or gross value:

  • Copper (sliding scale based on LME price per tonne):

    • Below USD 4,000: 4%

    • USD 4,000–4,999: Typically around 5.5–6.5% (adjusted bands)

    • Higher thresholds up to 10% at USD 7,000+

  • Base metals (excluding copper, cobalt, vanadium): 5% on norm value

  • Energy and industrial minerals: 5% on gross value

  • Gemstones: 6% on gross value

  • Precious metals: 6% on norm value

  • Cobalt and vanadium: 8% on norm value

Liability applies to license holders, artisanal miners, and even processors using local minerals. Payments are due within 14 days of the month of sale.

Tax Treatment and Deductibility

Prior to 2022, MRT was often non-deductible, leading to higher effective taxation and concerns over tax avoidance. The reintroduction of deductibility in 2022 (confirmed ongoing in 2025) lowers the overall tax rate:

  • Example: At a 10% MRT rate, deductibility saves 3% (30% CIT × 10%) in effective tax, reducing the combined burden.

  • This has boosted investor confidence, contributing to over USD 7 billion in pledges between 2022–2024 and production growth toward 1 million tonnes of copper in 2025.

Additional incentives include:

  • 100% capital allowances

  • Extended loss carry-forward (up to 10 years)

  • 0% withholding tax on dividends from mining operations

Advantages and Challenges from a Tax Perspective

Advantages:

  • Royalties provide stable, predictable revenue (less vulnerable to profit shifting or transfer pricing).

  • Deductibility makes the regime competitive globally, supporting expansion in critical minerals like copper and cobalt amid the energy transition.

  • Easier administration compared to auditing profits.

Challenges:

  • High royalties can deter marginal projects, especially during low commodity prices.

  • Frequent past changes eroded predictability; recent stability under the Minerals Regulation Commission Act (2024, effective 2025) aims to address this.

  • Reliance on royalties means revenue volatility with prices, though the sliding scale for copper mitigates this.

Mining contributes significantly to government revenue (often 40–70% of exports), with projections of 5–7% of GDP potential if optimized.

Conclusion

From a tax viewpoint, Zambia's mineral royalty regime as of late 2025 is progressive and investor-friendly, with deductibility of MRT against 30% CIT reducing double taxation and enhancing competitiveness. This supports ambitions to triple copper production by 2031 while ensuring fiscal gains. Ongoing focus on transparency, stable policy, and value addition will be key to maximizing benefits for sustainable development.

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