Zambia Exceeds Mid-Year Tax Target Despite Revenue Challenges

The government has reported a strong tax collection performance in the first half of 2025, surpassing its mid-year revenue target by K2.9 billion despite ongoing economic headwinds and implementation challenges with new tax systems.

The Zambia Revenue Authority (ZRA) collected K70.3 billion in tax revenue during the first six months of 2025, exceeding the government's target of K67.4 billion. This robust performance comes as the nation continues efforts to strengthen its fiscal position following years of economic challenges.

Finance and National Planning Minister Dr Situmbeko Musokotwane attributed the strong showing to “higher than expected” collections across most tax categories, signalling improved compliance and economic activity in key sectors.

However, the positive headline figures mask underlying challenges in specific revenue streams that continue to hamper the government's broader fiscal consolidation efforts.

According to the government's 2026-2028 Medium Term Budget Plan, several key tax areas underperformed against expectations. Value Added Tax (VAT), excise duties, and export duties all fell short of their respective targets during the period.

Domestic VAT collections were particularly affected by delayed payments from businesses grappling with liquidity constraints. The situation was compounded by initial compliance issues with the newly implemented Smart Invoicing System, which the ZRA has been rolling out to improve tax collection efficiency and reduce revenue leakage.

Excise duty collections also disappointed, primarily due to reduced receipts from the electricity levy as the country continues to battle power supply challenges that have affected industrial production and consumption patterns.

Total domestic revenues still reached K88 billion, aligning closely with government projections and demonstrating the resilience of the domestic tax base even amid economic pressures.