Itcmining

Mining is the spine of the Zimbabwean economy and, fittingly, it is taxed under a special, self-contained regime that displaces much of the ordinary income-tax machinery. The starting point is the same as for every taxpayer — a miner is charged income tax on taxable income under Section 6 of the Income Tax Act [Chapter 23:06], computed through the funnel established in Income Tax Foundations (gross income, less exemptions, less deductions). But almost every step of that computation has a mining-specific override. The governing provision is Section 15(2)(f), which grants, "in respect of income from mining operations, the allowances and deductions for which provision is made in the Fifth Schedule in lieu of the allowances and deductions provided in paragraphs (c), (d), (e) and (t)" of Section 15(2). In other words, a miner does not claim the ordinary capital allowances of the Fourth Schedule (treated in the lesson on Capital Allowances); instead it claims capital redemption under the Fifth Schedule — and paragraph 10 of the Fifth Schedule expressly forbids any Fourth-Schedule (paragraph (c)) deduction against mining income.

The rates are mining-specific. For the year of assessment 2025, the taxable income of a company or trust derived from mining operations is taxed at 24% under Section 14(2)(g) of the Finance Act [Chapter 23:04] — one percentage point below the 25% general corporate rate — plus the 3% AIDS Levy. The holder of a special mining lease is taxed at a flat 15% under Section 14(2)(f), and is additionally exposed to an Additional Profits Tax under Section 33 and the Twenty-Third Schedule. Layered on top of income tax — and quite separate from it — are mining royalties, charged under Section 245 of the Mines and Minerals Act [Chapter 21:05] at rates fixed in the Schedule to Chapter VII of the Finance Act: currently diamonds and other precious stones 10%, platinum 7%, lithium 7%, chrome 5%, gold by other miners 3% or 5% (below or above a US$1,200/oz price), small-scale gold 1%–2%, and base/industrial metals, coal, black granite and quarry/dimensional stone 2%.

The defining feature of mining taxation is the capital redemption allowance. Mining is enormously capital-intensive — shafts, plant, headgear, processing facilities, access roads — and the law lets a miner write off its capital expenditure far faster than an ordinary business. The Fifth Schedule defines "capital expenditure" very widely (buildings, works and equipment; shaft sinking; and crucially all pre-production development, surveys, boreholes, general administration and management, and interest on mining loans). It then offers a choice of redemption methods: the "life of mine" method in paragraph 2 (unredeemed balance plus current expenditure, divided by the approved estimated life of the mine), available to mine-owning companies; a "fair and reasonable" allowance in paragraph 3 for other persons; and, most importantly, the election in paragraph 4(2) to deduct the whole of the current year's capital expenditure plus a proportion of the unredeemed balance — an election that, for a new mine under paragraph 4(4), allows the entire unredeemed balance to be written off in the first year of production. These elections are binding.

Three further deductions are unique to miners. Under Section 15(2)(f)(ii), a "miner" (defined as the owner, tributor or option holder of a mining location, or the holder of a prospecting licence) may elect — the election being binding — to deduct exploration and prospecting expenditure (surveys, boreholes, trenches, pits and incidental costs) either in the year incurred or carried forward against future mining income; this was the issue in LCF Zimbabwe Ltd v ZIMRA 20-HH-227. Under Section 15(2)(f)(iii), a miner may deduct the mining royalty paid in the year — a provision with a turbulent history: inserted in 2003, repealed in 2014 (the repeal not affecting the ordinary deduction of revenue expenditure, per ZIMRA v Murowa Diamonds (Pvt) Ltd 23-SC-085), re-inserted from 1 January 2020, and substituted again by Section 11 of the Finance (No.2) Act 7 of 2024 with effect from 1 January 2025. And under paragraph 6 of the Fifth Schedule, a miner may elect to deduct renewals or replacements of buildings, works or equipment not exceeding US$10,000 per item (Finance Act 13 of 2023).

Two structural advantages complete the picture. First, the assessed-loss carry-forward has no six-year limit for mining (the proviso in Section 15(3), contrasted in General Deductions), so mining losses can be carried forward indefinitely — vital for long-gestation projects. Second, the multi-location aggregation proviso to Section 15(2)(f) lets a miner pool allowances and losses across two or more mining locations where the operations are "inseparable or substantially interdependent" in an integrated beneficiation process. On disposal, recoupment of redeemed capital expenditure flows back into gross income under paragraph (i) of the Section 8(1) definition of "gross income" (not paragraph (j), which governs the Fourth-Schedule recoupment of ordinary businesses) — and the special "recoupment from capital expenditure" definition in Section 2 caps the clawback on damage or destruction at the original cost of the asset.

This lesson dissects the mining regime clause by clause — the definitions, the three redemption methods, the exploration and royalty deductions, the renewal allowance, the change-of-ownership rules, the recoupment mechanism, the special mining lease and additional profits tax, and the royalty schedule — with full worked USD computations for a small-scale individual miner, an SME contractor-miner, and a large corporate mine-owner, and with the case law and audit pitfalls that surround each.

Mining occupies a unique place in any resource economy, and Zimbabwe — with gold, platinum, diamonds, lithium, chrome, nickel, coal and a long list of base and industrial minerals — depends on it for export earnings, employment and fiscal revenue. Three features of mining make ordinary income-tax rules a poor fit, and explain why the legislature carved out a special regime.

First, mining is extraordinarily capital-intensive and front-loaded. Before a single ounce of gold or carat of diamond is sold, a miner must spend vast sums sinking shafts, building headgear and processing plants, stripping overburden, drilling boreholes, constructing access roads and housing a workforce — often for years of non-production. If those costs were treated like an ordinary factory under the Fourth Schedule'Section 25%-over-four-years pattern, much of the relief would fall in years when the mine earns nothing, wasting it. The Fifth Schedule instead lets a miner accumulate its capital expenditure into an "unredeemed balance" and redeem it against income as the mine produces — and, by election, write off the entire balance very quickly, even in a new mine's first production year.

Second, mining exhausts a wasting asset. A mine has a finite life; the ore body is consumed. The "life of mine" redemption method in paragraph 2 mirrors this economic reality by spreading capital expenditure over the approved estimated life of the mine rather than over arbitrary depreciation rates. This is conceptually closer to depletion than to depreciation.

Third, the State is the owner of the minerals. Under Zimbabwean law minerals vest in the State, and the miner extracts them under licences, claims, leases or special grants issued under the Mines and Minerals Act [Chapter 21:05]. The State therefore takes its share twice: through royalties (a charge on the value of the mineral produced, regardless of profit) and through income tax (a charge on taxable profit). Royalties are a separate, profit-blind charge; income tax sits on top. The two must be kept conceptually distinct, even though ZIMRA collects both and the royalty is itself a deduction for income-tax purposes.

Where does mining sit in the syllabus? It is a specialised application of the principles already established: the charge to tax (Income Tax Foundations), the gross income concept and its source rules (Gross Income; Residence and Source), the general and specific deductions (General Deductions; Specific Allowable Deductions), the capital-versus-revenue boundary (Capital vs Revenue Receipts), and the capital allowance mechanism whose mining cousin is the subject of this lesson (Capital Allowances). It also interlocks with Withholding Taxes (the Additional Profits Tax on special mining leases, Section 33), Transfer Pricing (cross-border mineral sales and management fees), and Capital Gains Tax on the disposal of mining title. Because the amounts are colossal and the elections binding, mining is a high-stakes ZIMRA audit area and a perennial examination favourite.

The enabling provision — Section 15(2)(f)

Section 15(2)(f) of the Income Tax Act [Chapter 23:06] is the gateway. It has three subparagraphs:

• Subparagraph (i) allows, "in respect of income from mining operations, the allowances and deductions for which provision is made in the Fifth Schedule in lieu of the allowances and deductions provided in paragraphs (c), (d), (e) and (t)." The phrase "in lieu of" is decisive: a miner uses the Fifth Schedule instead of — not in addition to — the Fourth-Schedule capital allowances (paragraph (c)), the right-of-use premium deduction (paragraph (d)), the lease-improvement deduction (paragraph (e)) and the royalty cap deduction (paragraph (t)). A proviso (inserted by Act 18 of 2000, substituted by the Finance Act 1 of 2019) permits allowances or deductions to be claimed across two or more mining locations together where the Commissioner is satisfied the operations are inseparable or substantially interdependent — namely the locations are held by the same taxpayer and the minerals form part of an integrated process of beneficiation under the taxpayer's control.
• Subparagraph (ii) allows a "miner" to deduct exploration and prospecting expenditure — "surveys, boreholes, trenches, pits and other prospecting and exploratory works undertaken for the purpose of acquiring rights to mine minerals in Zimbabwe or incurred on a mining location in Zimbabwe," plus incidental expenditure. The miner may elect (which election shall be binding) that the expenditure be (a) allowed in the year incurred or (b) carried forward and allowed against mining income in any subsequent year. "Miner" is defined as a person who, when the expenditure was incurred, was (a) the owner, tributor or option holder of a mining location, or (b) the holder of a prospecting licence or exclusive prospecting order under the Mines and Minerals Act [Chapter 21:05]. This is the provision litigated in LCF Zimbabwe Ltd v ZIMRA 20-HH-227.
• Subparagraph (iii) allows a "miner" to deduct the amount of any mining royalty paid during the year of assessment under the Act. Its history is important for the old-versus-new contrast: it was inserted by Act 10 of 2003, repealed by Act 1 of 2014 (with effect from 1 January 2014), re-inserted by the Finance (No.2) Act 7 of 2019 with effect from 1 January 2020, and substituted by Section 11 of the Finance (No.2) Act 7 of 2024 with effect from 1 January 2025. The Supreme Court in ZIMRA v Murowa Diamonds (Pvt) Ltd 23-SC-085 confirmed that the 2014 repeal did not prevent royalties being deducted under the general deduction formula in Section 15(2)(a) during the period the specific provision was absent.

The charging rates — Finance Act [Chapter 23:04]

The rates that convert mining taxable income into tax are fixed in Section 14 of the Finance Act:

• Section 14(2)(g): taxable income of a company or trust derived from mining operations — 24% (substituted by the Finance (No.2) Act 10 of 2020 with effect from 31 December 2020), plus the 3% AIDS Levy.
• Section 14(2)(f): taxable income of the holder of a special mining lease — 15%.
• An individual carrying on mining as a sole trader is taxed on the graduated personal scale up to 40% (year of assessment 2025), plus 3% AIDS Levy.

Mining royalties are charged under Section 245 of the Mines and Minerals Act [Chapter 21:05] at the rates in the Schedule to Chapter VII of the Finance Act (set out in the table at the end of this lesson). Royalties are not income tax; they are a charge on the gross fair market value of the mineral produced, payable whether or not the mine makes a profit, and are themselves a deduction for income-tax purposes under Section 15(2)(f)(iii).

The Fifth Schedule, clause by clause

Paragraph 1 — interpretation. The Schedule turns on a wide definition of "capital expenditure", which means expenditure in relation to mining operations on: (a)(i) buildings, works or equipment (including premiums for the use of buildings, works, equipment or land) — but excluding expenditure above stated ceilings on dwellings used by controlling individuals of a closely-held mining company, and above the passenger-motor-vehicle cap in paragraph 14 of the Fourth Schedule; (a)(ii) shaft sinking (which "includes the expenditure on sumps, pump chambers, stations and ore bins accessory to a shaft"); and (a)(iii) expenditure incurred prior to the commencement of production or during any period of non-production on preliminary surveys, bore-holes, development, general administration and management, including any interest payable on loans utilized for mining purposes; and (b) expenditure on school/hospital buildings connected with the mining operation, subject to cost ceilings. The definition was extended in 2019 to include computer software used in mining operations. Other key definitions: "estimate of the life of the mine" (capped at 10 years for lead/zinc, 5 years for iron, 20 years for any other mine); "approved estimated life" (the company's estimate, or the Commissioner's if he rejects it); "recoupment from capital expenditure" (cross-referenced from Section 2 — amounts from sale, disposal, damage or destruction of redemption-ranking assets, capped at original cost in the damage/destruction case); and "expenditure" meaning net expenditure after refunds.

Paragraph 2 — redemption for mine-owning companies (the "life of mine" method). For a company that owns the mine, the redemption allowance is computed annually as follows: (a) take the unredeemed balance of capital expenditure at the start of the year, subtract recoupments from capital expenditure during the year, and add the capital expenditure incurred during the year; (b) divide that aggregate by the number of years in the approved estimated life of the mine; (c) the quotient is the deduction. The company must furnish an annual statement estimating the mine's life from certified ore-reserve estimates. Where non-contiguous mines are worked separately, redemption is computed separately for each.

Paragraph 3 — redemption for persons other than mine-owning companies. For a company mining a mine it does not own, or for any person other than a company (an individual, a partnership), the allowance is "such sum as the Commissioner considers to be fair and reasonable." An individual who owns the mine and furnishes a life-of-mine estimate may, by the proviso, have the allowance computed under the paragraph 2 method.

Paragraph 4 — further provisions and the key elections. Beyond the default methods, paragraph 4(2) lets any person carrying on mining operations elect that the deduction for the year be the whole of the capital expenditure incurred during the year plus a proportion of the unredeemed balance (the proportion being the balance divided by the life of the mine for an owner, or a fair-and-reasonable amount fixed by the Commissioner otherwise). This election — binding for all subsequent years under paragraph 4(5) — converts the regime into an accelerated/immediate write-off of current capital expenditure, which is why most active miners elect it. Paragraph 4(4) goes further for a "new mine" (an independent workable proposition first commencing regular production on or after 1 April 1968, or a reopened/reorganised mine): the miner may elect to deduct, in the first year of production, the whole of the current capital expenditure plus the entire unredeemed balance — a 100% first-year write-off. Paragraph 4(6) provides that, where the paragraph 4(2) election is made, recoupments are first deducted from the unredeemed balance. These elections were considered in SZ (Pvt) Ltd v ZIMRA 20-HH-142.

Paragraph 5 (allowance for non-contiguous mine) and Paragraph 7 (training investment allowance) were both repealed by the Finance Act 18 of 2000 with effect from 1 January 2001.

Paragraph 6 — renewals and replacements. A miner may elect (binding) to deduct expenditure on any single renewal or replacement of buildings, works or equipment that, with accessories, does not exceed US$10,000 (amended by the Finance Act 13 of 2023). A proviso caps at US$1,500 the renewal/replacement of a dwelling used by a controlling individual of a closely-held (≤4 individuals) mining company. Amounts deducted under paragraph 6 do not rank as capital expenditure for redemption (avoiding double relief).

Paragraph 8 — change of ownership of a mine. On a change of ownership, transferor and transferee jointly state the proportion of the consideration (or value, if none) attributable to redemption-ranking assets. If satisfied, the Commissioner allows that amount to rank as capital expenditure for redemption in the transferee's hands and treats it as a recoupment from capital expenditure in the transferor's hands (paragraph 8(2)). If not satisfied, he determines the amount (paragraph 8(3)). On a gratuitous transfer by a person who elected under paragraph 4, the amount ranking for the transferee is capped at the transferor's unredeemed balance (paragraph 8(4)). Group-reconstruction (paragraph 8(6)) and spouse (paragraph 8(7)) elections allow the transfer to carry the transferor's unredeemed balance across (again deemed a recoupment in the transferor's hands).

Paragraph 10 — exclusions. "No deduction shall, as regards income derived from the carrying on of mining operations, be made in respect of the allowances or deductions referred to in paragraphs (c), (d), (e) and (t) of Section 15(2)." This is the mirror of the "in lieu of" wording in Section 15(2)(f)(i): a miner gets the Fifth-Schedule redemption instead of the Fourth-Schedule capital allowances.

Recoupment and the assessed-loss rule

When a redemption-ranking asset is sold or a recoupment otherwise arises, paragraph (i) of the Section 8(1) definition of "gross income" brings into gross income any recoupments from capital expenditure that exceed the balance of capital expenditure ranking for redemption, and any recovery of amounts allowed under paragraph 6. (Contrast the ordinary business, whose Fourth-Schedule recoupment runs through paragraph (j) — see the lesson on Capital Allowances.) The Section 2 definition of "recoupment from capital expenditure" excludes, in the damage/destruction case, any portion in excess of the original cost of the asset.

Finally, the assessed-loss treatment is uniquely generous: under the proviso to Section 15(3) (established in General Deductions), the ordinary six-year limit on carrying forward an assessed loss does not apply to mining operations — a mining loss may be carried forward indefinitely, and a special breakdown applies where a person mines in more than one location.

The special mining lease and additional profits tax

A "special mining lease" is issued under Part IX of the Mines and Minerals Act [Chapter 21:05] to large, capital-intensive projects under a special mining lease agreement with the Government. Its special mining lease operations (mining, exploration and development as defined in the Twenty-Second Schedule) are taxed at the reduced 15% rate (Section 14(2)(f)) but are additionally subject to an Additional Profits Tax (APT) under Section 33 and the Twenty-Third Schedule — a resource-rent tax that claws back a share of supernormal returns once the project clears a threshold rate of return (cross-referenced in the lesson on Withholding Taxes, and applied in Zimbabwe Platinum Mines 21-SC-159).

Old law versus current law

Three shifts deserve the explicit old-versus-new contrast. First, the mining company rate was reduced from 25% to 24% by the Finance (No.2) Act 10 of 2020 (with effect from 31 December 2020) — a deliberate, modest incentive distinguishing mining from general business. Second, the specific royalty deduction in Section 15(2)(f)(iii) was repealed in 2014 and re-inserted from 2020 (and re-substituted from 2025); during the gap, royalties remained deductible under the general formula (Murowa Diamonds). Third, the royalty rates themselves have moved repeatedly — platinum, for example, was 10%, cut to 2.5%, then raised to 7% from 1 January 2023; gold for small-scale miners was tiered through statutory instruments; and lithium (7%), black granite and other dimensional/quarry stone (2%) were added as Zimbabwe's mineral mix changed. Every rate must therefore be read for the specific year of assessment.

The mining taxable-income computation

A miner's taxable income is built in the same funnel as any taxpayer, but with mining substitutions at each stage:

1. Gross income from mining — the proceeds of mineral sales (and any specific inclusions), sourced in Zimbabwe because the mineral is won here. "Income derived from mining operations" is defined as income from a particular mining location, which matters for the multi-location rules.
2. Less exempt income — limited; most mining income is fully taxable.
3. Less ordinary revenue deductions under Section 15(2)(a) — wages, fuel, reagents, electricity, security, ordinary repairs — exactly as for any trade (subject to Section 16 prohibitions).
4. Less the mining-specific deductions — the capital redemption allowance (Fifth Schedule paragraphs 2–4), exploration/prospecting expenditure (Section 15(2)(f)(ii)), the royalty paid (Section 15(2)(f)(iii)), and renewals/replacements (paragraph 6) — instead of Fourth-Schedule capital allowances.
5. Add back recoupments under Section 8(1)(i) where capital expenditure has been recovered.
6. Apply the rate — 24% (mining company), 15% (special mining lease) or the individual scale — plus 3% AIDS Levy; deduct credits.

Capital expenditure — the wide gateway

The single most important concept is the breadth of "capital expenditure" in paragraph 1. Unlike an ordinary business, where pre-trade and exploratory costs are often non-deductible capital with no allowance, a miner's development, survey, borehole, shaft-sinking, general administration and management costs, and even interest on mining loans incurred before or during non-production, all rank as capital expenditure that can be redeemed. This recognises the reality that a mine spends heavily for years before earning. Two carve-outs apply: expenditure on dwellings for the controlling individuals of a closely-held mining company is capped, and the passenger-motor-vehicle cap (paragraph 14 of the Fourth Schedule, USD 10,000) is imported. Amounts deducted as renewals under paragraph 6 are excluded so they are not redeemed twice.

The three redemption methods compared

Method 1 — life of mine (paragraph 2). Available to a mine-owning company. Each year: (opening unredeemed balance − recoupments + current capital expenditure) ÷ approved estimated life. The "approved estimated life" is the company's certified estimate, capped at 20 years (10 for lead/zinc, 5 for iron). This spreads relief across the mine's productive life and is the default for a stable producing mine.

Method 2 — fair and reasonable (paragraph 3). For a non-owner company or any non-company person. The Commissioner allows "such sum as [he] considers to be fair and reasonable." An owner-individual can opt into the life-of-mine method by furnishing a life estimate.

Method 3 — the accelerated election (paragraph 4(2)). Any miner may elect to deduct the whole of the current year's capital expenditure plus a proportion of the unredeemed balance. This front-loads relief and is the election most active miners make. It is binding for all later years (paragraph 4(5)). For a new mine (paragraph 4(4)), the election allows the entire unredeemed balance plus current expenditure to be written off in the first production year — a 100% first-year deduction that can shelter a new mine's early profits entirely.

The choice mirrors the SIA/wear-and-tear election in the Fourth Schedule (Capital Allowances): a profitable producer prefers the accelerated election to defer tax; a miner expecting losses might prefer the life-of-mine spread so that relief falls in profitable years — although, because mining losses carry forward indefinitely, the indefinite carry-forward removes much of the risk that accelerated relief is "wasted."

Exploration and prospecting expenditure (Section 15(2)(f)(ii))

A "miner" — an owner, tributor, option holder, or prospecting-licence holder — may elect (binding) how to treat exploration and prospecting expenditure: deduct it immediately in the year incurred, or carry it forward to set against future mining income. Immediate deduction suits a producing miner with income to absorb it; carry-forward suits a pure explorer with no current income, preserving the relief until production begins. This is distinct from capital expenditure redemption — it is a separate, electable deduction confirmed in LCF Zimbabwe Ltd v ZIMRA 20-HH-227.

The royalty: a charge that is also a deduction

A royalty is charged on the gross fair market value of the mineral produced under Section 245 of the Mines and Minerals Act, at the rate for the mineral (e.g. 5% chrome, 7% platinum/lithium, 10% diamonds). It is profit-blind — payable even in a loss year — and is collected by ZIMRA. For income-tax purposes, the royalty paid is deductible under Section 15(2)(f)(iii). So a platinum miner selling USD 100,000,000 of metal pays a 7% royalty = USD 7,000,000, which it then deducts in computing its income-tax taxable income. The royalty is therefore an expense of mining, not a credit against income tax.

Recoupment and disposal

When a miner sells a redemption-ranking asset, or recovers capital expenditure (e.g. insurance on destroyed plant), the amount is a "recoupment from capital expenditure." Under Section 8(1)(i), a recoupment is brought into gross income to the extent it exceeds the unredeemed balance of capital expenditure (or recovers a paragraph 6 deduction). Under the paragraph 4(2) election, recoupments are first netted against the unredeemed balance (paragraph 4(6)), so they reduce future redemption rather than immediately becoming income — a softening that reflects the pooled nature of the balance. For damage or destruction, the recoupment is capped at the original cost of the asset (Section 2 definition), so a windfall insurance recovery above cost is not income (it may be a capital gain).

Special mining lease, additional profits tax and royalties combined

A special mining lease project faces a three-layer State take: (1) royalties on production value; (2) income tax at 15% on taxable income (Section 14(2)(f)); and (3) Additional Profits Tax under Section 33 and the Twenty-Third Schedule, a resource-rent tax that captures a further share once the project's cumulative cash flows exceed a specified rate of return. The 15% rate is a trade-off for the APT exposure and the long-term commitment of a special mining lease.

All computations use year of assessment 2025 rates: 24% for a mining company (Section 14(2)(g)) plus 3% AIDS Levy, 15% for a special mining lease (Section 14(2)(f)), and the individual scale to 40% for a sole-trader miner, each plus 3% AIDS Levy. Figures are illustrative; confirm rates and royalty percentages for the actual year.

Individual — a small-scale gold miner (sole trader)

Farai is a registered small-scale gold miner (owner of a mining location). In the year of assessment 2025 he:

• sells gold worth USD 120,000 (delivered to a licensed gold dealer; small-scale royalty 1% on the relevant tranche);
• incurs ordinary running costs (fuel, labour, reagents) of USD 40,000;
• incurs capital expenditure of USD 30,000 on a stamp mill and compressor;
• incurs exploration expenditure of USD 6,000 on pitting and trenching, which he elects to deduct immediately.

Item	Amount
Gross income (gold sales)	USD 120,000
Less running costs (Section 15(2)(a))	(40,000)
Less royalty paid (Section 15(2)(f)(iii)) — 1% × 120,000	(1,200)
Less exploration (Section 15(2)(f)(ii), elected immediate)	(6,000)
Less capital redemption — paragraph 4(2) election, full current capex	(30,000)
Taxable income from mining	USD 42,800

Farai's USD 42,800 is taxed on the individual scale (to 40%) plus 3% AIDS Levy. The accelerated paragraph 4(2) election let him write off the entire USD 30,000 of plant in year 1, and the royalty and exploration costs are fully deductible. As a sole trader, partnerships are transparent (see Taxation of Partnerships) had he mined in partnership.

SME — a contractor company mining a tributed claim

Kadoma Minerals (Pvt) Ltd is an SME that mines a claim it does not own under a tribute agreement (so it uses the paragraph 3 "fair and reasonable" redemption). In 2025 it:

• sells chrome worth USD 800,000 (chrome royalty 5%);
• incurs running costs of USD 300,000;
• incurs capital expenditure of USD 200,000; the Commissioner accepts a fair and reasonable redemption of USD 100,000 for the year (paragraph 3), the balance carried forward as unredeemed.

Item	Amount
Gross income (chrome sales)	USD 800,000
Less running costs	(300,000)
Less royalty paid — 5% × 800,000	(40,000)
Less capital redemption (paragraph 3, fair & reasonable)	(100,000)
Taxable income from mining	USD 360,000
Income tax @ 24%	USD 86,400
AIDS Levy @ 3% of tax	USD 2,592
Total income tax	USD 88,992

The unredeemed balance carried forward is USD 100,000 (200,000 capex less 100,000 redeemed), available against future income. Note the 24% mining-company rate (one point below the 25% general rate), and that the USD 40,000 royalty is a deduction, not a tax credit.

Large corporate — a new mine electing 100% first-year write-off

Great Dyke Platinum (Pvt) Ltd, a large corporate, brings a new platinum mine into production in the year of assessment 2025. In its first production year it:

• sells platinum worth USD 50,000,000 (platinum royalty 7%);
• has an unredeemed balance of capital expenditure of USD 200,000,000 accumulated during the pre-production development years (shaft sinking, plant, surveys, development, interest on mining loans — all ranking as capital expenditure);
• incurs current-year capital expenditure of USD 30,000,000;
• incurs running costs of USD 15,000,000.

As a new mine, it elects under paragraph 4(4) to write off the entire unredeemed balance plus current capital expenditure in the first production year:

Item	Amount
Gross income (platinum sales)	USD 50,000,000
Less running costs	(15,000,000)
Less royalty paid — 7% × 50,000,000	(3,500,000)
Less capital redemption (paragraph 4(4): 200,000,000 + 30,000,000)	(230,000,000)
Taxable income / (assessed loss)	(USD 198,500,000)

The mine has a large assessed loss of USD 198,500,000, which — because of the mining exception to the six-year carry-forward limit (Section 15(3)) — is carried forward indefinitely to shelter profits as the mine ramps up. This is the central advantage of mining taxation: enormous up-front capital is redeemed in full, and the resulting loss never expires. Had Great Dyke instead been a special mining lease holder, its taxable income would ultimately be taxed at 15% (Section 14(2)(f)) but it would face Additional Profits Tax (Section 33) once cumulative returns crossed the threshold.

Where treatment differs between the groups

The redemption method differs by status: a mine-owning company uses the life-of-mine method (paragraph 2) or the accelerated election (paragraph 4); a non-owner company or individual uses the fair-and-reasonable method (paragraph 3), with owner-individuals able to opt into life-of-mine. The rate differs: 24% for a mining company, 15% for a special mining lease (with APT), and up to 40% for a sole-trader miner. And only a "miner" (owner/tributor/option/prospecting-licence holder) can claim the exploration and royalty deductions in Section 15(2)(f)(ii)–(iii) — a pure service contractor that is not a "miner" cannot.

PL Mines (Pvt) Ltd v ZIMRA 15-HH-466 (High Court). Annotated against paragraph 1 of the Fifth Schedule, this decision concerns the scope of "capital expenditure" and the onus on the taxpayer (under Section 63) to prove the character and amount of mining capital expenditure ranking for redemption. It illustrates that classification of expenditure as redeemable capital — and the supporting records — is the taxpayer's burden.

LCF Zimbabwe Ltd v ZIMRA 20-HH-227 (High Court). Annotated against the definition of capital expenditure and Section 15(2)(f)(ii), this case addressed removal of overburden and the line between redeemable capital expenditure and electable exploration/development expenditure. It anchors the practical distinction between costs that enter the redemption pool and costs a "miner" may elect to deduct immediately or carry forward.

ZIMRA v Murowa Diamonds (Pvt) Ltd 23-SC-085 (Supreme Court). When the specific royalty deduction in Section 15(2)(f)(iii) was repealed in 2014, the question arose whether royalties remained deductible. The Supreme Court held that the 2014 repeal did not affect the general formula for deducting revenue expenditure — royalties, being an expense incurred in the production of mining income, remained deductible under Section 15(2)(a) during the gap before re-insertion. The principle: a specific deduction's repeal does not necessarily remove an item from the general deduction if it independently qualifies.

SZ (Pvt) Ltd v ZIMRA 20-HH-142 (High Court). Annotated against paragraph 4 of the Fifth Schedule, this decision concerns the redemption elections — including the proportion of the unredeemed balance and the new-mine election — and their binding effect once made. It underscores that the paragraph 4(2) election cannot be revisited in later years.

Zimbabwe Platinum Mines (Pvt) Ltd 21-SC-159 (Supreme Court). Relevant to the special mining lease and the Additional Profits Tax/advance-tax architecture (Section 33), this authority is cross-referenced in the lesson on Withholding Taxes. It illustrates the additional fiscal burden specific to large special-mining-lease projects.

Where Zimbabwe lacks an on-point authority on a fine point (for example, the precise quantum of a "fair and reasonable" redemption under paragraph 3), the matter is governed by the statute and the Commissioner's determination, reviewable on objection and appeal, rather than by any invented case; South African mining-tax decisions are persuasive only.

Claiming Fourth-Schedule capital allowances on mining assets. Paragraph 10 of the Fifth Schedule and the "in lieu of" wording in Section 15(2)(f)(i) prohibit Fourth-Schedule (SIA/wear-and-tear) claims against mining income. Mining capital expenditure is relieved only through Fifth-Schedule redemption. Mixing the two double-counts relief and is a standard audit adjustment.

Treating the redemption election as reversible. The paragraph 4(2) election (and the paragraph 6 renewals election, and the Section 15(2)(f)(ii) exploration election) are binding. A miner who elects accelerated redemption cannot later switch to life-of-mine to manage a profitable year.

Confusing royalties with income tax. Royalties are a separate charge on production value, profit-blind, and are a deduction for income tax — not a credit against it. Recording the royalty as a tax credit, or omitting it as a deduction, both distort the computation.

Mis-estimating the life of the mine. The life-of-mine redemption depends on a certified ore-reserve estimate, capped at 20 years (10 lead/zinc, 5 iron). An inflated life understates the annual redemption; an unsupported estimate is open to Commissioner substitution.

Missing recoupment on disposal of mining assets. Selling plant, or recovering insurance on destroyed assets, triggers a recoupment from capital expenditure under Section 8(1)(i), netted against the unredeemed balance (or income if the balance is exhausted). The damage/destruction recoupment is capped at original cost.

Overlooking the multi-location rules. A miner with several locations cannot freely pool allowances unless the operations are inseparable or substantially interdependent in an integrated beneficiation process; otherwise each location's income and redemption are computed separately, and an assessed loss in one cannot automatically shelter profit in another.

Forgetting that only a "miner" claims the special deductions. A contractor providing mining services but holding no mining title (owner/tributor/option/prospecting licence) is not a "miner" and cannot claim the exploration or royalty deductions in Section 15(2)(f)(ii)–(iii) — it is an ordinary trader under Section 15(2)(a).

Ignoring the special-mining-lease Additional Profits Tax. The 15% rate looks attractive but a special mining lease carries APT (Section 33, Twenty-Third Schedule). Modelling only the 15% income tax understates the total State take.

Documentation under Section 15(2a). As for all Section 15(2) deductions, from 1 January 2023 a deduction (including redemption-ranking expenditure proven by a VAT invoice) must be supported by a fiscal tax invoice where the supplier is VAT-registered.

Work through the questions one at a time. Choose an answer and it is graded immediately, with an explanation and the provision it comes from. Your progress is saved, so you can stop and resume.

• Mining has a self-contained regime. A miner is charged under Section 6 but computes relief under Section 15(2)(f) and the Fifth Schedule, used "in lieu of" the Fourth-Schedule capital allowances; paragraph 10 bars Section 15(2)(c)/(d)/(e)/(t) deductions against mining income.
• Capital expenditure is defined widely — buildings, works, equipment, shaft sinking, and all pre-production development, surveys, boreholes, administration and interest on mining loans — and is redeemed, not depreciated.
• Three redemption methods: the life-of-mine method (paragraph 2, mine-owning companies; balance ÷ approved estimated life, capped at 20/10/5 years); the fair-and-reasonable allowance (paragraph 3, others); and the accelerated election (paragraph 4(2), full current capex plus a proportion of the balance), with a 100% first-year write-off for a new mine (paragraph 4(4)). All elections are binding.
• Two more miner-only deductions: exploration/prospecting expenditure (Section 15(2)(f)(ii), elected immediate or carried forward) and the mining royalty paid (Section 15(2)(f)(iii), re-inserted from 2020, substituted from 2025; Murowa Diamonds confirms the general formula covered the 2014–2019 gap). Renewals/replacements up to USD 10,000 per item are electable under paragraph 6.
• Rates (year of assessment 2025): mining company/trust 24% (Section 14(2)(g)); special mining lease 15% (Section 14(2)(f)) plus Additional Profits Tax (Section 33, Twenty-Third Schedule); sole-trader miner up to 40%; all plus the 3% AIDS Levy.
• Royalties are a separate, profit-blind charge on the gross fair-market value of the mineral (Section 245, Mines and Minerals Act; rates in the Schedule to Chapter VII of the Finance Act) — e.g. diamonds/precious stones 10%, platinum 7%, lithium 7%, chrome 5%, gold (other) 3%/5%, base/industrial metals, coal and dimensional/quarry stone 2% — and are deductible for income tax, not a credit.
• Assessed losses carry forward indefinitely for mining (the exception to the six-year limit in Section 15(3)) — the cornerstone advantage for long-gestation projects.
• Recoupment of capital expenditure flows into gross income under Section 8(1)(i) (not the Fourth-Schedule paragraph (j)), netted first against the unredeemed balance under the paragraph 4 election, and capped at original cost for damage/destruction.
• Multi-location pooling is allowed only where operations are inseparable or substantially interdependent in an integrated beneficiation process; otherwise income and redemption are computed per location.
• Anchoring cases: PL Mines 15-HH-466, LCF Zimbabwe 20-HH-227, Murowa Diamonds 23-SC-085, SZ 20-HH-142, Zimbabwe Platinum Mines 21-SC-159.

Table 1 — Mining redemption methods compared

Method	Who may use it	How computed	Election binding?
Life of mine (para 2)	Mine-owning company	(balance − recoupments + current capex) ÷ approved estimated life	n/a (default)
Fair & reasonable (para 3)	Non-owner company; any non-company person	Such sum as Commissioner considers fair & reasonable	n/a (default)
Accelerated election (para 4(2))	Any miner	Full current capex + proportion of unredeemed balance	Yes
New-mine election (para 4(4))	Operator of a new mine	Full current capex + entire unredeemed balance in first production year	Yes

Table 2 — Mining royalty rates (Schedule to Chapter VII, Finance Act; year of assessment 2025)

Mineral	Royalty rate
Diamonds; other precious stones	10%
Platinum	7%
Lithium	7%
Chrome	5%
Gold — other miners (price < US$1,200/oz)	3%
Gold — other miners (price > US$1,200/oz)	5%
Gold — small-scale miners	1%–2% (tiered)
Other precious metals	4%
Base metals (other than chrome); industrial metals	2%
Coal; coalbed methane	2%
Black granite; other dimensional stone; quarry stones	2%

Table 3 — Income-tax rates by mining taxpayer (year of assessment 2025)

Taxpayer	Income-tax rate	Additional charge
Company/trust from mining (Section 14(2)(g))	24% + 3% AIDS Levy	—
Special mining lease holder (Section 14(2)(f))	15% + 3% AIDS Levy	Additional Profits Tax (Section 33, 23rd Sch)
Individual sole-trader miner	Scale to 40% + 3% AIDS Levy	—

Diagram — determining a miner's deduction

flowchart TD
 A[Expenditure by a miner] --> B{Ordinary running cost?}
 B -->|Yes| C[Deduct under Section 15(2)(a)]
 B -->|No| D{Royalty paid?}
 D -->|Yes| E[Deduct under Section 15(2)(f)(iii)]
 D -->|No| F{Exploration/prospecting cost?}
 F -->|Yes| G[Elect: deduct now or carry forward Section 15(2)(f)(ii)]
 F -->|No| H{Capital expenditure on mine?}
 H -->|No| I[Consider Fourth Schedule? No - para 10 bars it]
 H -->|Yes| J{New mine?}
 J -->|Yes| K[Elect para 4(4): full write-off year 1]
 J -->|No| L{Mine-owning company?}
 L -->|Yes| M[Life of mine para 2, or elect para 4(2)]
 L -->|No| N[Fair and reasonable para 3]

Statutes & sections

• Income Tax Act [Chapter 23:06]
• Section 6 — charge to income tax on taxable income.
• Section 15(2)(f)(i) — Fifth-Schedule allowances/deductions "in lieu of" paragraphs (c), (d), (e), (t); multi-location aggregation proviso.
• Section 15(2)(f)(ii) — exploration/prospecting expenditure; binding election (immediate or carried forward); definition of "miner."
• Section 15(2)(f)(iii) — deduction of mining royalty paid (inserted 2003, repealed 2014, re-inserted 2020, substituted 2025).
• Section 15(3) — assessed-loss carry-forward; no six-year limit for mining; multi-location breakdown.
• Section 8(1), paragraph (i) — recoupment from capital expenditure into gross income.
• Section 2 — definitions: "mining operations," "mining location," "income derived from mining operations," "recoupment from capital expenditure" (capped at original cost on damage/destruction), "special mining lease," "special mining lease operations."
• Section 33 — Additional Profits Tax for special mining leases.
• Fifth Schedule — para 1 (interpretation; "capital expenditure," "estimate of the life of the mine," "approved estimated life"); para 2 (life-of-mine redemption for mine-owning companies); para 3 (fair-and-reasonable redemption for others); para 4 (elections; new-mine 100% first-year; binding); para 5 (repealed, Act 18/2000); para 6 (renewals/replacements, USD 10,000 cap; USD 1,500 dwelling); para 7 (training allowance, repealed); para 8 (change of ownership; recoupment in transferor's hands; group and spouse elections); para 10 (exclusion of Section 15(2)(c)/(d)/(e)/(t)).
• Twenty-Second Schedule — special mining lease operations.
• Twenty-Third Schedule — Additional Profits Tax.
• Section 15(2a) — fiscal tax invoice requirement (from 1 January 2023).
• Finance Act [Chapter 23:04]
• Section 14(2)(g) — mining company/trust rate 24% (substituted FA(No.2)10/2020 w.e.f. 31 December 2020).
• Section 14(2)(f) — special mining lease rate 15%.
• Schedule to Chapter VII — rates of mining royalties (Section 245 of the Mines and Minerals Act): diamonds/precious stones 10%, platinum 7%, lithium 7%, chrome 5%, gold (other) 3%/5%, small-scale gold 1%–2%, other precious metals 4%, base/industrial metals/coal/dimensional/quarry stone 2%.
• Graduated individual scale to 40%; 3% AIDS Levy.
• Mines and Minerals Act [Chapter 21:05] — title (claims, leases, tributes, prospecting licences); Part IX (special mining lease); Section 245 (royalties).
• Capital Gains Tax Act [Chapter 23:01] — disposal of mining title/specified assets; windfall above original cost.

Case law

• PL Mines (Pvt) Ltd v ZIMRA 15-HH-466 — scope of mining "capital expenditure"; taxpayer's onus.
• LCF Zimbabwe Ltd v ZIMRA 20-HH-227 — overburden removal; capital expenditure vs electable exploration/development (Section 15(2)(f)(ii)).
• ZIMRA v Murowa Diamonds (Pvt) Ltd 23-SC-085 — royalties deductible under the general formula during the 2014–2019 repeal of Section 15(2)(f)(iii).
• SZ (Pvt) Ltd v ZIMRA 20-HH-142 — Fifth-Schedule redemption elections (paragraph 4); binding effect; new mine.
• Zimbabwe Platinum Mines (Pvt) Ltd 21-SC-159 — special mining lease / Additional Profits Tax architecture (cross-reference).

ZIMRA guidance

• ZIMRA External Guide to the Levy on Specified Minerals (minerals levy administration).
• Mining-sector return and royalty remittance guidance; year-of-assessment USD and ZiG tax tables.