Analysis of the Tax Implications: Zimbabwe Platinum Mines (Pvt) Ltd v ZIMRA [2026]
The recent judgment in Zimbabwe Platinum Mines (Pvt) Ltd v Zimbabwe Revenue Authority (73 of 2026) stands as a landmark decision in Zimbabwean fiscal jurisprudence. It clarifies the boundaries of “mineral royalties” and reinforces the principle of legality in taxation. The case centers on a multi-million dollar dispute regarding whether mineral-bearing products—specifically matte and concentrate—attracted royalties prior to January 2022.
1. The Core Legal Dispute
Imagine you bake a cake. The government has a law saying they get a 10% “Royalty Tax” on every finished cake you sell. However, instead of selling finished cakes, you sell raw cake batter to a professional decorator.
The crux of the matter involved ZIMRA’s attempt to collect royalty shortfalls for the period of June 1, 2018, to December 31, 2021. ZIMRA argued that the term “minerals” under the Finance Act was an all-encompassing category that included unrefined products. Consequently, they demanded royalties based on the gross fair market value of the final refined mineral, without deductions for the costs incurred in reaching that state.
Zimplats, conversely, argued that “minerals” and “mineral-bearing products” were legally distinct entities. Since the Finance Act (during the period in question) only fixed rates for minerals, there was no legislative machinery to charge royalties on intermediate products like matte and concentrate.
2. Analysis of the Legislation
The court’s analysis focused on two primary sections of the Finance Act [Chapter 23:04]:
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Section 37(2): Obliges agents to deduct royalties on specific minerals (precious stones, metals, etc.) based on the face value of the invoice.
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Section 37(9): A “for the avoidance of doubt” clause stating that in calculating gross fair market value, no deductions should be made for beneficiation or processing costs.
The Statutory Gap
The Court found a significant “silence” in the legislation. While the Mines and Minerals Act provides the general power to levy royalties, the Finance Act is the “charging framework.”
The court held that for a tax to be valid, the charging provision must explicitly identify the subject and the precise rate. Between 2018 and 2021, the Schedule to the Finance Act prescribed rates for “platinum” (the mineral) but was silent on “platinum matte” (the mineral-bearing product).
3. Judicial Precedence and Principles
The judgment, delivered by Manyangadze J, relied heavily on the “Strict Interpretation Rule” of fiscal legislation.
A. The Principle of Legality
Citing ZIMRA v ZIMASCO (Pvt) Ltd SC 79/13, the court affirmed that no tax can be imposed without clear and express statutory authority. If there is ambiguity or silence, the law must be resolved in favor of the taxpayer (in dubio contra fiscum).
B. Rejection of the Purposive Approach for Tax Rates
While ZIMRA argued for a “purposive approach”—claiming the legislature intended to encourage local beneficiation by taxing unrefined products heavily—the court opted for the narrow approach. It ruled that words must be given their ordinary grammatical meaning. Since matte is not a refined mineral, it cannot be treated as one for tax purposes unless the law says so explicitly.
C. The Retrospectivity Trap
A crucial turning point was the Finance (No. 2) Act of 2024, which retrospectively amended the definition of “mineral” to include “mineral-bearing products” back to 2010. However, the Court (following the Supreme Court’s lead in the ZIMASCO case) ruled that:
“Liability arises not merely from definitional inclusions but from clearly articulated charging provisions.”
Even if the definition was changed retrospectively, the rate for those products had still not been fixed for the 2018-2021 period. You cannot have a tax liability with a definition but no rate.
4. Key Takeaways for the Mining Sector
The decision provides several vital precedents for mining houses and tax practitioners:
| Issue | Judicial Determination |
| Classification | Matte and Concentrate are “mineral-bearing products,” distinct from “minerals.” |
| Deductibility | Section 37(9) proscribing deductions only applies to refined minerals, not intermediate products. |
| Regulatory Silence | If the Finance Act Schedule does not list a specific rate for a product, no royalty is owed. |
| Legislative Updates | The 2022 amendments (Finance Act 7 of 2021) were a new introduction of liability, not a clarification of old law. |
Key Takeaways
The judgment in Zimplats v ZIMRA [2026] ZWHHC 35 reinforces the “Principle of Legality” over administrative overreach. Below are the critical findings that define the current tax landscape for Zimbabwe’s extractive sector:
a. The Death of “Tax by Inference”
The Court categorically rejected ZIMRA’s attempt to tax intermediate products (matte and concentrate) using rates intended for final refined minerals.
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The Rule: A tax obligation cannot arise through “common sense” or “logical intent.” It must be expressly stated in a charging provision (the Finance Act Schedule).
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Impact: If a specific mineral stage or product is not explicitly assigned a rate in the Schedule, ZIMRA cannot unilaterally apply the nearest equivalent rate.
b. Retrospectivity is Not a “Fix-All”
ZIMRA’s reliance on the 2024 retrospective amendment—which redefined “minerals” to include “mineral-bearing products” back to 2010—failed for a technical but vital reason.
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The Limitation: While the definition of what is taxable can be changed retrospectively, a tax remains unenforceable if the applicable rate was missing during the period in question.
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Precedent: Retrospective definitions do not create historical liability if the underlying “machinery” for calculation (the rate) did not exist at the time of the transaction.
c. Valuation: Face Value vs. Theoretical Value
The court supported the use of the Face Value of the Invoice as the correct base for royalties on intermediate products.
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The Clarification: Section 37(9), which forbids deductions for “beneficiation and processing,” applies only to the production of the final mineral.
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For Miners: When selling matte or concentrate, the price paid by the buyer (reflecting its semi-processed state) is the “gross fair market value” for that specific product, not a discounted value of a future refined mineral.
d. Impact on Beneficiation Strategy
The ruling creates a temporary “tax-free” window for historical exports of intermediate products (pre-2022) where no specific rates were set.
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Strategic Reprieve: This absolves several mining houses of multi-million dollar “shortfall” claims issued by ZIMRA during its 2018–2021 audit sweep.
Comparison of Tax Liability (Pre- and Post-2022)
| Feature | Pre-January 2022 | Post-January 2022 |
| Product Scope | Only “Minerals” (Refined) | Minerals + Matte & Concentrate |
| Royalty Base | Invoice Face Value (for Matte/Concentrate) | Specified rates for intermediate stages |
| Deductions | Prohibited for refined minerals only | Prohibited as per specific product formulas |
| Legal Status | Non-taxable (if rate not specified) | Fully taxable under Finance Act 7 of 2021 |
Conclusion
The High Court’s ruling is a victory for the “certainty” of tax law. It prevents the revenue authority from using broad definitions or retrospective amendments to “fill in the gaps” left by the legislature. For the period before January 1, 2022, mineral-bearing products did not have a validly prescribed royalty rate in Zimbabwe, rendering ZIMRA’s assessment of shortfalls against Zimplats legally unsustainable.
