ZRA Reports Strong Revenue Growth as Tax-to-GDP Hits 22.1% in 2025
The Zambia Revenue Authority (ZRA has reported a historic improvement in tax performance, with the tax-to-GDP ratio rising to 22.1 per cent in 2025, the highest level recorded to date.
Speaking during the Ministry of Finance and National Planning Q1 2026 Budget and Economic Performance Townhall, Commissioner General Dingani Banda highlighted that the outcome exceeded targets by approximately 2.5 percentage points, reflecting improved tax administration and compliance measures.
He noted that total net revenue collections in Q1 2026 increased by 9.5 per cent to K38.95 billion, compared to K35.59 billion in the same period in 2025. The growth was largely driven by strong performance in PAYE, mineral royalty, mining company tax, and customs duty.
However, he pointed to significant declines in domestic VAT and import VAT, which were affected by exchange rate appreciation, reduced import volumes, and cash flow constraints among taxpayers.
“PAYE remained the largest contributor to revenue in Q1 2026, followed by import VAT and withholding tax,” Mr Banda said, adding that mining-related taxes continued to play a key role in overall collections.
He further revealed that refunds increased by 21.1 per cent to K6.9 billion, while non-tax revenue also contributed to overall inflows.
On sector performance, the mining and wholesale trade sectors remained the largest contributors to revenue, although both recorded slight declines in their overall share compared to 2025. Other sectors, including public administration, showed increased contributions.
Mr Banda also highlighted structural challenges, noting that only 1,042 taxpayers accounted for 80 per cent of total revenue in Q1 2026, underscoring a narrow tax base.
He said compliance levels improved significantly, with average return filing compliance rising to 63 per cent from 49 per cent in 2025, driven by enforcement measures such as electronic tax clearance systems.
Looking ahead, he warned of emerging risks, including geopolitical tensions in the Middle East, which have pushed up global oil prices and could impact inflation and economic growth.
He also outlined key reforms, including the rollout of Smart Invoice systems, enhanced data analytics for compliance monitoring, and expansion of service centres across the country.
Mr Banda concluded by urging taxpayers to take advantage of the Voluntary Disclosure Programme, which offers waivers on penalties and interest, as part of efforts to strengthen voluntary compliance and broaden the tax base.
