Analysing the tax treatment of mining royalties in Zimbabwe, grounded squarely on Section 36Q, the Thirty‑Seventh Schedule of the Finance Act [Chapter 23:04] (as amended by Finance (No.2) Act 7/2024) and supported by leading Zimbabwean court decisions.

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Tax Treatment of Mining Royalties in Zimbabwe

1. Introduction

Mining royalties occupy a central position within Zimbabwe’s fiscal architecture, constituting a constitutionally sanctioned charge on the extraction of finite mineral resources for the benefit of the Consolidated Revenue Fund. As Zimbabwe intensifies revenue mobilisation from the mining sector—its single largest foreign currency earner—the legislative and judicial framework governing mining royalties has evolved markedly, particularly following the promulgation of the Finance (No.2) Act 7 of 2024, which inserted Section 36Q and the Thirty‑Seventh Schedule into the Finance Act [Chapter 23:04].

This article offers a comprehensive analysis of the tax treatment of mining royalties in Zimbabwe, focusing on:

• the statutory basis of royalties under Section 36Q;
• the valuation and computation mechanisms under the Thirty‑Seventh Schedule;
• compliance obligations, penalties, and enforcement powers; and
• the jurisprudential principles established by Zimbabwean courts, notably in disputes involving ZIMRA, ZIMASCO, Zimplats, and Afrochine Smelting.

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2. Statutory Foundation: Section 36Q of the Finance Act

Section 36Q, inserted by Section 18 of Finance (No.2) Act 7/2024, provides the express charging provision for mining royalties with effect from 1 January 2025. It stipulates:

“There shall be charged, levied and collected throughout Zimbabwe for the benefit of the Consolidated Revenue Fund in any period of assessment mining royalties in accordance with the Thirty‑Seventh Schedule at the rate fixed from time to time in the Charging Act.”

This provision affirms that:

1. mining royalties are a national tax;
2. liability arises only in accordance with the Schedule; and
3. rates must be fixed by statute, not administrative practice.

The importance of a clear charging provision has been repeatedly underscored by the Supreme Court, which has held that no tax may be imposed without express legislative authority, a principle reaffirmed in ZIMRA v ZIMASCO (Pvt) Ltd SC 79/13 and subsequent cases.

 

2.1. Rates – Mining Royalties (2026)

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3. Legislative Architecture of the Thirty‑Seventh Schedule

3.1 Interpretation and Liable Persons

The Thirty‑Seventh Schedule, effective 31 December 2024, defines a “liable person” as:

• any miner required to submit royalty returns; or
• Fidelity Gold Refinery (Pvt) Ltd in respect of gold transactions.

The Schedule incorporates definitions from Chapter VII of the Charging Act, ensuring consistency across Zimbabwe’s tax statutes.

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4. Basis of Calculation and Valuation of Mining Royalties

4.1 Mineral‑Specific Valuation Rules

Paragraph 2 of the Schedule introduces a mineral‑specific valuation regime:

• Platinum Group Metals (PGMs)
  • Concentrate: 85% of international refined price (LME)
  • Matte: 90% of international refined price (LME)
• Gold
  • Gross fair market value as determined by Fidelity Gold Refinery
• Diamonds and other minerals
  • Gross fair market value of MMCZ‑negotiated contracts

Crucially, the Schedule declares that no deduction is permitted for:

• beneficiation;
• processing;
• transport; or
• any other costs.

This legislative clarity addresses valuation disputes that historically plagued royalty assessments, particularly concerning freight and beneficiation deductions.

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4.2 Judicial Interpretation of “Gross Fair Market Value”

The Supreme Court’s decision in Afrochine Smelting (Pvt) Ltd v ZIMRA confirmed that gross fair market value prohibits deductions for freight or logistics costs, holding that royalties must reflect the economic worth of the mineral resource extracted, not the miner’s cost structure.

Conversely, earlier cases such as ZIMRA v ZIMASCO clarified that valuation rules cannot apply retroactively where no royalty rate had been prescribed for mineral‑bearing products.

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5. Mineral vs Mineral‑Bearing Products: A Decisive Jurisprudential Divide

One of the most litigated issues in Zimbabwean mining taxation is the legal distinction between:

• “minerals”, and
• “mineral‑bearing products.”

5.1 ZIMASCO Litigation

In ZIMRA v ZIMASCO, the Supreme Court held that chrome concentrates and ferrochrome were not subject to royalties prior to January 2022, as no statutory rate existed for mineral‑bearing products at the time. The Court emphasised:

“No tax or royalty can be imposed unless the legislature has clearly prescribed both the subject and rate of the charge.”

This decision shielded ZIMASCO from liabilities exceeding US$7 million and established a binding precedent on statutory certainty in taxation.

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5.2 Zimplats v ZIMRA (2026)

In Zimbabwe Platinum Mines (Pvt) Ltd v ZIMRA (2026), the High Court reaffirmed this principle, ruling that platinum matte and concentrate exported between 2018 and 2021 were not taxable, as no royalty rate existed for such products during that period. Justice Manyangadze ruled that:

“Definitions alone cannot create a tax obligation; the rate‑fixing machinery must exist.”

The court rejected attempts by ZIMRA to rely on retrospective amendments, aligning itself with Supreme Court authority.

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6. Returns, Self‑Assessment, and Compliance Obligations

6.1 Duty to Render Returns

Paragraph 3 imposes strict monthly filing obligations:

• returns must be submitted by the 10th day of the month following disposal;
• Fidelity Gold Refinery acts as a withholding agent for gold.

Once submitted, a return constitutes:

• a self‑assessment; and
• a deemed assessment issued by the Commissioner‑General.

Failure to comply triggers estimated assessments under Section 45 of the Act.

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7. Penalties and Additional Royalties

7.1 Additional Royalty Regime

Paragraph 5 introduces punitive additional royalties, equal to:

• the full royalty amount (in cases of non‑filing); or
• the difference between declared and correct royalties (in cases of understatement).

However, the Commissioner retains discretion to remit penalties where no intent to evade tax is established.

This discretionary remission reflects judicial calls for proportionality in tax enforcement, particularly where disputes arise from legislative ambiguity rather than fraud.

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8. Collection Mechanisms and Payment Modalities

8.1 Deduction at Source

Paragraph 7 provides for withholding of royalties at source by:

• financial institutions;
• MMCZ;
• Fidelity Gold Refinery; or
• the miner (for other minerals).

8.2 Payment Structure

For gold, diamonds, platinum, palladium, and lithium, royalties are payable:

• 50% in kind;
• 10% in foreign currency;
• 40% in local currency.

This hybrid payment regime underscores Zimbabwe’s strategic objective of:

• building mineral reserves; and
• preserving foreign currency inflows.

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9. Interest, Civil Penalties, and Criminal Liability

Failure to remit royalties timeously gives rise to:

• interest payable (including in kind);
• a primary civil penalty equal to the royalty due; and
• escalating secondary penalties, culminating in criminal prosecution.

Courts have affirmed that penalties must be applied strictly within statutory limits and cannot substitute for missing charging provisions, as reiterated in ZIMRA v ZIMASCO.

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10. Conclusion

The contemporary tax treatment of mining royalties in Zimbabwe reflects a maturing fiscal regime, increasingly shaped by judicial insistence on:

• legality;
• certainty; and
• non‑retroactivity.

Section 36Q and the Thirty‑Seventh Schedule represent a deliberate legislative response to judicial criticism of earlier ambiguities. By clearly defining valuation bases, compliance mechanisms, and enforcement powers, the 2024 amendments significantly reduce interpretative uncertainty.

Nevertheless, judicial decisions such as ZIMASCO, Zimplats, and Afrochine Smelting remain foundational, reinforcing the principle that revenue imperatives cannot override statutory precision. Going forward, Zimbabwe’s mining royalty regime will continue to be judged not only by the revenue it raises, but by its consistency with constitutional and rule‑of‑law principles.

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