Caledonia Mining Welcomes Withdrawal of Key Tax Proposals from 2026 Budget

By Knowledge Muneri

Caledonia Mining Corporation and other gold producers have welcomed a reprieve after Finance Minister Mthuli Ncube withdrew three proposals in the 2026 National Budget that would have impacted earnings and investment. The proposals included increasing the gold royalty rate from 5% to 10%, introducing a 15% withholding tax on interest payable on offshore loans, and changing the tax treatment of capital expenditure.

However, following pushback from legislators, the government has revised the proposals. The increased royalty rate will now only apply if the gold price exceeds $5,000 per ounce, rather than $2,500 as initially suggested. Additionally, the changes to capital expenditure deductions and the 15% withholding tax on offshore loan interest have been withdrawn.

Caledonia Mining Corporation stated that the revised proposals, expected to be enacted before the end of the year, should have no material impact on the financial outlook for its Zimbabwean assets, provided gold prices remain below $5,000 per ounce. The company's Bilboes Gold Project, which relies heavily on offshore debt funding, is expected to benefit from the withdrawal of the withholding tax proposal.

Mark Learmonth, Chief Executive Officer of Caledonia, welcomed the revised provisions, saying: "The 2026 National Budget of Zimbabwe is yet to be enacted into law. However, we welcome the revised provisions announced this week, which we believe demonstrate the Government of Zimbabwe's support for the mining sector and the development of future mining projects in the country."