Accounting and Compliance for the 10% Export VAT on Unbeneficiated Minerals: An Analysis of the Finance Act (No. 7) of 2025

Overview

The promulgation of the Finance Act (No. 7) of 2025 marked a pivotal shift in Zimbabwe’s fiscal and industrial policy. By introducing a 10% Value Added Tax (VAT) on the export of specified unbeneficiated minerals, the Government of Zimbabwe sought to accelerate domestic value addition and beneficiation, discourage the exportation of raw mineral resources, and ensure that the national fiscus captures a higher share of the economic rent generated from the extractive sector. For mining entities, this legislation necessitates a fundamental reassessment of their supply chain strategies, financial accounting systems, and tax compliance frameworks.

Regulatory Framework and Legislative Intent

Under the provisions of Finance Act (No. 7) of 2025, the legislative intent is clearly directed towards the “mineral-to-market” value chain. Historically, the export of goods from Zimbabwe has been zero-rated for VAT purposes, facilitating international competitiveness. However, the 2025 Act modifies this treatment for specific unbeneficiated minerals, effectively imposing a 10% tax on the gross fair market value of these exports. This tax is not merely a revenue-gathering measure; it acts as a fiscal deterrent against the exportation of raw ore, incentivizing mining companies to invest in local processing plants to reach beneficiated states where the tax burden is either eliminated or significantly reduced.

Minerals Subject to the 10% Export VAT

The Act identifies several critical strategic minerals whose exportation in raw or unbeneficiated form attracts the 10% VAT. Mining operators must ensure their internal systems accurately classify products according to these definitions:

• Lithium: The 10% VAT applies to the export of unbeneficiated lithium ore and unbeneficiated lithium concentrates. The valuation is notably based on the “realisable lithium sulphate” content, creating a direct link between the export price and the potential chemical value of the mineral.
• Chrome: The tax covers “unbeneficiated chrome,” which is explicitly defined in the Act to include chrome ore, fines, crushed/milled/washed ore, and chrome concentrate in pellet or ingot form.
• Platinum Group Metals (PGMs): VAT is levied on unbeneficiated platinum exports, with specific conditions regarding the presence and approval of local smelting and concentration plants.
• Antimony: The export of antimony is now subject to this VAT, with the valuation derived from international metal exchange market prices.
• Dimensional Stones: The tax regime applies to cut and polished dimensional stones, marking a shift in how value is assessed in the stone quarrying sector.

Accounting for 10% Export VAT

From an accounting perspective, the introduction of this tax requires robust transactional monitoring. Because this VAT is levied on exports—a category previously treated as zero-rated—accounting departments must reconfigure their ERP systems to distinguish between standard zero-rated exports and these specific “10% taxed” export categories.

Valuation and Determination of Output Tax

The “gross fair market value” is the standard for taxation. For lithium, the valuation is benchmarked against the realisable value of the chemical derivative (lithium sulphate). Mining companies must implement high-precision assay testing for every shipment to ensure that the declared value corresponds to international market standards (typically based on LME or Fastmarkets benchmarks). Discrepancies between the declared value and the actual mineral content, as verified by independent assayers, expose the company to significant audit risks and potential penalties.

Documentation and Remittance

ZIMRA has introduced a specific manual return, Return for Remittance of Value Added Tax on Supply of goods and/or services at 10% (Exports), to be used alongside the primary tax return submitted through the Tax and Revenue Management System (TaRMS).

Key accounting steps include:

1. Segregation of Sales: Create a distinct sub-ledger for “Export Sales Subject to 10% VAT.”
2. Conversion to Foreign Currency: The Act mandates that these export taxes be settled strictly in United States Dollars (USD) or equivalent convertible foreign currency at the prevailing international exchange rate. Accounting systems must handle the multi-currency reporting requirements, ensuring that VAT payable is accurately accrued and remitted in the mandated currency.
3. Tax Period Alignment: The VAT must be accounted for in the period of exportation. The timing of the “supply” is governed by the issuance of the bill of entry or the transfer of risk to the off-taker, whichever occurs earlier.

Strategic Implications and Tax Planning

For CFOs and Tax Managers, the 10% export VAT represents a significant increase in the cost of sales. Mining entities are encouraged to:

• Audit Beneficiation Levels: Evaluate the cost-benefit analysis of investing in local beneficiation versus paying the 10% export tax. If beneficiation is not immediately feasible, companies must optimize their supply chains to ensure that their products are classified at the lowest possible tax tier.
• Transfer Pricing Documentation: With the government mandating the “Quoted Price Method,” companies must maintain ironclad contemporaneous transfer pricing documentation. Any discounts applied for quality or impurity must be strictly justified by international assay standards to avoid ZIMRA adjustments.
• Lobbying and Engagement: Engage with the Ministry of Mines and Ministry of Finance regarding potential deferrals for mining entities that are currently in the process of building smelting or refining infrastructure, as provided for in transitional clauses.

Conclusion

The 10% export VAT under the Finance Act (No. 7) of 2025 is a transformative fiscal measure. By integrating mining activities more closely with local value-addition requirements, the government has fundamentally changed the operational landscape for exporters of lithium, chrome, platinum, antimony, and dimensional stone. Success in this new regime requires not only technical compliance in tax accounting and remittance but also a strategic alignment of mining operations with the national goal of beneficiation. Companies that proactively invest in local processing and maintain rigorous data integrity regarding mineral valuation will be best positioned to navigate the complexities introduced by this legislation.