A mining royalty is not a tax on profit. It is the price the nation charges for parting with a finite, non-renewable resource that, in law, belongs to it. Under the Mines and Minerals Act [Chapter 21:05] the dominium in Zimbabwe's subsoil resources vests in the President on behalf of the State, and the Finance Act [Chapter 23:04] puts the point beyond doubt for the fiscal context in Section 22Q: "for the avoidance of doubt it is declared that dominium in the subsoil resources on which royalties are charged vests in the President by right of prerogative." Because the royalty is the price for the mineral rather than a tax on the miner's success, it is levied on the value of what is extracted and disposed of — whether or not the mine is profitable. A loss-making mine still pays royalty; a fabulously profitable one pays the same percentage. Hold that idea apart from income tax (a charge on profit) and the whole of this lesson follows.

The charge itself lives in two interlocking statutes. Section 244 of the Mines and Minerals Act imposes the royalty: the miner of a registered mining location "shall pay royalty on all minerals or mineral-bearing products won from such location which have been disposed of," and Section 245 provides that the rate is fixed by Parliament in the Schedule to Chapter VII of the Finance Act. On the Income Tax side, the Finance (No. 2) Act 7 of 2024 inserted a new Section 36Q into the Income Tax Act [Chapter 23:06] with effect from 1 January 2025, charging mining royalties "in accordance with the Thirty-Seventh Schedule at the rate fixed from time to time in the Charging Act." The result is a deliberate division of labour: the charge and machinery sit in the Taxes Act and the Mines and Minerals Act, while the rates sit in the Finance Act so that they can be re-set each year through the Budget.

The rate depends entirely on the mineral. Per the Schedule to Chapter VII of the Finance Act, the headline ad valorem rates a practitioner must commit to memory are: diamonds 10% and other precious stones 10%; gold 3% (where sold when the price is below US$1 200 per ounce) or 5% (at or above US$1 200/oz) for ordinary producers, and 1%–2% for small-scale gold miners on the tiered SI 83/2021 basis; platinum 7% (raised from 2.5% with effect from 1 January 2023); lithium 7% (introduced with effect from 1 January 2023); other precious metals 4%; chrome 5%; and base metals other than chrome, industrial metals, coalbed methane, all types of coal, black granite, other dimensional stone and quarry stones all 2%. A full table appears in the Tables and diagrams section.

The base on which the percentage bites is the gross fair market value of the mineral produced — and the single most litigated word in this area is "gross." Section 37(9) of the Finance Act and the proviso to paragraph 2(3) of the Thirty-Seventh Schedule both declare that, in calculating the gross fair market value, "no deduction shall be made of beneficiation, processing or other costs whatsoever." A miner who nets off smelting, refining or transport costs before applying the rate has under-declared the royalty and will meet a penalty. The Schedule fixes how value is found for the hardest cases: for platinum-group metals, 85% of the international (London Metal Exchange) price of the refined metal contained in concentrate, or 90% for matte; for gold, the gross fair market value as determined by Fidelity Gold Refinery (Private) Limited; and for diamonds and all other minerals, the gross fair market value of contracts entered into by the Minerals Marketing Corporation of Zimbabwe (MMCZ).

Royalty is largely a deduction-at-source tax. Under Section 37(2) of the Finance Act, the MMCZ (and, for gold, every financial institution and Fidelity Gold Refinery) deducts royalty at source "based on the face value of the invoice" and remits it to ZIMRA by the 10th day of the following month; late remittance attracts interest and a primary civil penalty of double the royalty under Section 37(5). Where royalty is taken in kind (a feature of recent policy that the State retains a share of the physical mineral), Section 37C lets the Minister appoint a collection agent — the MMCZ, the Reserve Bank of Zimbabwe or Fidelity Printers and Refiners. The Mines and Minerals Act adds relief at the small end: Section 244(3) gives a full rebate where the monthly assessed royalty does not exceed US$200, and a tapered charge between US$200 and US$300; Section 244(4) gives a full rebate where the mineral is used wholly within Zimbabwe; and Section 244(5) gives a beneficiation rebate for product sent to an approved beneficiation plant.

Finally, the royalty interacts with income tax through Section 15(2)(f)(iii) of the Income Tax Act, which allows a miner to deduct the mining royalty paid during the year of assessment. That deduction has had a turbulent history: inserted in 2003, repealed by the Finance Act 1 of 2014 from 1 January 2014, and re-inserted by the Finance (No. 2) Act 7 of 2019 with effect from 1 January 2020. The Supreme Court in Zimra v Murowa Diamonds (Pvt) Ltd 23-SC-085 confirmed that the 2014 repeal did not disturb the general formula for deducting revenue expenditure. The period of the assessment therefore decides whether the royalty is an income-tax deduction or a pure cost — a distinction worth millions on a large operation. This lesson is Lesson 2 of the Mining Taxation module; it assumes the architecture set out in The Zimbabwe Mining Fiscal Regime — An Overview (Lesson 1) and feeds forward into capital redemption allowances (Lesson 3) and the special mining lease and additional profits tax (Lesson 4).

Begin with the economic intuition, because every rule in this lesson is downstream of it. When a Zimbabwean mine sells an ounce of gold or a carat of diamond, two quite different claims arise against the proceeds. The first is the nation's claim to be paid for the mineral itself — the resource was the country's, it is gone once extracted, and the State is entitled to a slice of its value as the price of disposal. The second is the fiscus's claim to a share of the miner's profit from the enterprise of winning and selling it. The royalty answers the first claim; income tax answers the second. They are computed on different bases (value versus profit), at different times (on disposal versus at year-end assessment), and by different machinery (deduction at source by the MMCZ versus self-assessment under the Income Tax Act). A student who blurs them will, for instance, wrongly net the royalty off the income-tax base in a year when the law forbids it, or wrongly subtract refining costs from the royalty base. Keeping the two claims separate is the single most important habit in mining taxation.

Why does Zimbabwe lean so heavily on royalties? Because a royalty is collectible even when income tax is not. Mining profit is easy to erode — through transfer mispricing on inter-company mineral sales, through aggressive capital redemption claims, through losses ring-fenced in one location while another is profitable. A royalty on gross value is far harder to avoid: it bites on the physical fact of disposal at a market-referenced price, before any costs or deductions, and it is withheld at source by the marketing monopoly through which most minerals must pass. For a resource-dependent economy with constrained administrative capacity, the royalty is the revenue floor beneath the more elastic income tax. That is also why the State has increasingly insisted on a portion of royalty in kind for strategic minerals: physical metal in the Reserve Bank's vault is a hedge that cannot be argued down in an objection.

Where does this sit in the syllabus? Lesson 1 mapped the whole regime; this lesson drills into the royalty limb of that map. It does not re-teach the special income-tax rate or capital redemption — those have their own lessons — but it must constantly cross the boundary, because the deductibility of the royalty is an income-tax question and the valuation of the mineral echoes through transfer-pricing and customs export documentation. ZIMRA's audit interest in royalties is concentrated in three predictable places: the valuation base (was gross fair market value used, with no costs netted off?), the correct rate for the mineral and the circumstances (was the gold sold above or below the US$1 200 threshold; is the producer genuinely small-scale?), and source-deduction compliance (did the MMCZ or financial institution withhold and remit on time?). Each is a number that moves an assessment materially, which is why the precision this lesson demands is professional necessity, not pedantry.

Read the royalty framework as four layers stacked on each other: the imposition (Mines and Minerals Act), the income-tax charge and machinery (Income Tax Act and its Thirty-Seventh Schedule), the rates and collection (Finance Act, Chapter VII and its Schedule), and the deductibility interface (Section 15 of the Income Tax Act). Every specific below is taken by number from the source statutes.

Mines and Minerals Act [Chapter 21:05] — the imposition. Section 244 ("Royalty") is the charging provision: subsection (1) requires the miner of a registered mining location to pay royalty on all minerals or mineral-bearing products won from the location and disposed of, "whether within or outside Zimbabwe," during any month, "at such rate per unit of mass as may be fixed in terms of section two hundred and forty-five." Subsection (2) aggregates locations forming part of one "property" (defined in Section 246). Subsection (3) provides the small-value rebate — a full rebate where the monthly assessed royalty "does not exceed two hundred United States dollars," and where it exceeds US$200 but not US$300, "the royalty payable shall be three times the amount by which the assessed royalty exceeds two hundred dollars." Subsection (4) gives a full rebate for minerals "used wholly within Zimbabwe," and subsection (5) gives a beneficiation rebate for product disposed of to an approved beneficiation plant under Section 247. Section 245 ("Fixing of royalty") then hands the rate-setting power to Parliament: subsection (1), as substituted by Act 10 of 2009, states that "the rate of royalty payable in terms of Section 244 shall be fixed by the House of Assembly in the Schedule to Chapter VII of the Finance Act [Chapter 23:04]," with regard to three-year price history and representations by the Chamber of Mines of Zimbabwe. Supporting provisions include Section 248 (a dump may be a unit for royalty purposes), Section 249 (exemption where ore is extracted for experimental purposes), and Section 251 (monthly returns and payment).

Income Tax Act [Chapter 23:06] — the charge and machinery. The new Section 36Q ("Mining royalties"), inserted by Section 18 of the Finance (No. 2) Act 7 of 2024 with effect from 1 January 2025, provides that "there shall be charged, levied and collected throughout Zimbabwe for the benefit of the Consolidated Revenue Fund … mining royalties in accordance with the Thirty-Seventh Schedule at the rate fixed from time to time in the Charging Act." The Thirty-Seventh Schedule ("Mining Royalties"), inserted by Section 24 of the Finance (No. 2) Act 7 of 2024 with effect from 31 December 2024, carries the operative machinery: paragraph 1 (interpretation, importing the definition of "mineral" from Section 36(f) of the Finance Act); paragraph 2 (the basis of calculation and valuation rules, examined in section C); paragraph 3 (returns by liable persons not later than the 10th day of the following month, with a self-assessment deeming rule); paragraph 4 (estimated assessment, applying Section 45); and paragraph 5 (additional mining royalty on default or omission). The definition of "tax" in Section 2(1) of the Income Tax Act expressly includes "any mining royalty chargeable," which is why the Act's assessment, objection and recovery machinery reaches royalties.

Finance Act [Chapter 23:04] — the rates and collection. Chapter VII is the royalty engine room. Section 37 ("Rates of mining royalties, duty and fees and collection thereof"), substituted by Section 17 of Act 8 of 2020, provides in subsection (1) that the rates "shall be as therein shown" in the Schedule to Chapter VII; subsection (2) makes the MMCZ (for precious stones, precious metals other than gold, base metals, industrial metals, coalbed methane and coal) and, for gold, the MMCZ, authorised exporters and "every financial institution," agents who "deduct royalty … at source, based on the face value of the invoice"; subsection (3) sets the 10th-of-the-following-month remittance deadline; subsections (4)–(8) impose interest, a primary civil penalty of double the royalty, and secondary civil penalties for late remittance; and subsection (9) declares the no-cost-deduction rule for gross fair market value. Section 37A (collection) and Section 37B (methodology for determination of rates) were each repealed by the Finance (No. 2) Act 7 of 2024 with effect from 1 January 2025, their function absorbed into the Thirty-Seventh Schedule. Section 37C ("Agents for collection of royalties in kind"), inserted by the Finance Act 13 of 2023, lets the Minister designate the MMCZ, the Reserve Bank of Zimbabwe or Fidelity Printers and Refiners (Private) Limited as agents to collect royalties payable in kind. The Schedule to Chapter VII sets out the rate for each mineral category.

Section 15(2)(f)(iii) of the Income Tax Act — the deductibility interface. This subparagraph allows a "miner" (the owner, tributor or option holder of a mining location, or the holder of a prospecting licence or exclusive prospecting order) to deduct "the amount of any mining royalty paid during the year of assessment in terms of this Act." Its drafting history is the trap: inserted by Act 10/2003; 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 again by Section 11 of the Finance (No. 2) Act 7 of 2024 with effect from 1 January 2025. Between 1 January 2014 and 31 December 2019 the royalty was, by the express terms of the Act, not separately deductible under this head — although, as the Supreme Court held in Zimra v Murowa Diamonds, that repeal did not displace the general revenue-expenditure deduction in Section 15(2)(a).

Every royalty computation answers four questions in order: (1) Is there a disposal of a mineral won from a registered location? (2) Which mineral category, and therefore which rate, applies? (3) What is the gross fair market value base? (4) Does any rebate or in-kind adjustment apply? Work them in that sequence and the arithmetic is mechanical; skip a step and you will mis-state the charge.

Step 1 — the taxable event: disposal of a mineral won. Royalty under Section 244(1) attaches not to extraction but to disposal. The mineral must be "won from such location" and "disposed of … whether within or outside Zimbabwe." Two consequences follow. First, ore sitting on a stockpile has not yet triggered royalty; the charge crystallises when the mineral or mineral-bearing product is sold or otherwise disposed of. Second, export and domestic disposal are both caught — there is no escape by selling locally, although domestic use (not sale) may attract the Section 244(4) rebate. The word "mineral-bearing product" matters: royalty can attach to concentrate, matte, slime or dump material, not only to refined metal, which is why the Schedule has special valuation rules for concentrate and matte.

Step 2 — classify the mineral and select the rate. The rate is fixed by mineral category in the Schedule to Chapter VII. The categories are not always intuitive, and three carry sub-rules:

• Gold (ordinary producers) is rate-sensitive to the gold price. The Schedule fixes 3% "if the gold produced … is sold at a time when its price is below US$1 200 per ounce" and 5% "if … sold at a time when its price is above US$1 200 per ounce" (items substituted by the Finance (No. 2) Act 7 of 2019 with effect from 1 August 2019). The relevant price is the price at the time of sale, not an average — so the same mine can pay 3% on a January parcel and 5% on a March parcel.
• Gold (small-scale miners) is taxed on a tiered basis introduced by SI 83 of 2021 (backdated to 1 February 2021): 1% on the first 0.5 kg of gold delivered to a holder of a gold-dealing licence in a calendar month; 1% where the gold is delivered by a holder of a gold-buying-agency permit to a gold-dealing-licence holder; and 2% where the gold delivered in a calendar month exceeds 0.5 kg. The policy aim is to incentivise small producers to deliver formally rather than smuggle.
• Diamonds are taxed at 10%, but the Schedule provides that "no royalty is payable in respect of diamonds sold at a discount equivalent to the value of the royalty otherwise payable to any local diamond manufacturer" (item substituted by the Finance (No. 3) Act 13 of 2019 with effect from 1 January 2020; the old rate to 31 December 2019 was 15%). The carve-out is a beneficiation incentive: sell rough diamonds to a local cutter at a discount equal to the royalty, and the royalty is waived — value is meant to stay and be added in Zimbabwe.

The remaining categories are flat: other precious stones 10%; platinum 7% (reduced to 2.5% with effect from 1 April 2017, then raised from 2.5% to 7% with effect from 1 January 2023 by the Finance Act 8 of 2022); other precious metals 4%; lithium 7% (inserted with effect from 1 January 2023 by the Finance Act 8 of 2022); chrome 5% (raised from 2% with effect from 1 September 2015); and base metals other than chrome, industrial metals, coalbed methane, all types of coal, black granite, other cut or uncut dimensional stone, and quarry stones all 2% (coal, dimensional stone and quarry stones items inserted/amended by the Finance Act 7 of 2024 with effect from 1 January 2025).

Step 3 — find the gross fair market value (GFMV) base. This is where most errors and most ZIMRA adjustments live. The governing principle, in Section 37(9) of the Finance Act and the proviso to paragraph 2(3) of the Thirty-Seventh Schedule, is that GFMV is computed before any deduction: "no deduction shall be made of beneficiation, processing or other costs whatsoever incurred in the production of the mineral concerned." The Schedule then prescribes how GFMV is found:

• Platinum-group metals (PGMs): because PGMs are exported as concentrate or matte rather than refined metal, the base is a percentage of the international refined price. For concentrate, GFMV is 85% of the international price of the refined mineral contained therein, by reference to the London Metal Exchange (LME) price on the date of the transaction; for matte, 90%. The percentages stand in for the recovery and refining yet to occur downstream.
• Gold: GFMV is "the gross fair market value as determined from time to time by Fidelity Gold Refinery (Private) Limited" — the State refiner through which gold is delivered.
• Diamonds and all other minerals, ore or products: GFMV is "the gross fair market value of contracts entered into by the Minerals Marketing Corporation of Zimbabwe." Under paragraph 2(3), GFMV is "deemed to be the value determined on the date on which any sales contract is entered or on the date on which the purchaser takes possession of the product, whichever is higher."

Step 4 — apply rebates and in-kind adjustments. The Mines and Minerals Act rebates in Section 244(3)–(5) reduce or eliminate the charge at the margins: full rebate where the monthly royalty is ≤ US$200; a tapered charge between US$200 and US$300; full rebate for minerals used wholly within Zimbabwe; and a beneficiation-plant rebate. Separately, where the State takes part of the royalty in kind, the in-kind portion is valued and collected through a Section 37C agent (MMCZ, RBZ or Fidelity Printers and Refiners), and the cash royalty is reduced correspondingly. None of these rebates changes the base (still gross), only the amount finally payable.

A final conceptual point on timing and self-assessment. Under paragraph 3 of the Thirty-Seventh Schedule, a miner who disposes of minerals (otherwise than to Fidelity Gold Refinery) must render a return "not later than the 10th day of the month following" disposal, and that return is deemed to be a self-assessment. For gold delivered to Fidelity Gold Refinery, the refinery itself withholds and renders the return. Late or absent returns expose the miner to estimated assessment (paragraph 4) and an additional royalty equal to the royalty in default (paragraph 5), over and above the Section 37 civil penalties.

All figures are illustrative USD. Each example shows every line. Watch in particular how the gross base is preserved and how the rate is selected.

Example 1 — Ordinary gold producer, price below the threshold

Golden Reef (Pvt) Ltd, a registered gold mine, delivers gold to Fidelity Gold Refinery in February. The gross fair market value determined by Fidelity for the month's deliveries is US$2,400,000, and the spot gold price at the time of sale is US$1,150/oz — below US$1 200/oz.

Mineral category ............................... Gold (ordinary producer)
Gold price at time of sale ..................... US$1,150/oz → below US$1,200 ⇒ 3%
Gross fair market value (Fidelity Gold Refinery) US$2,400,000
Royalty = 3% × 2,400,000 ....................... US$72,000

The royalty is US$72,000, withheld at source by Fidelity Gold Refinery and remitted by the 10th of March. Note: no deduction is made for refining or transport before applying the 3%.

Example 2 — Same mine, price above the threshold

In March the same mine delivers gold with a Fidelity-determined GFMV of US$2,400,000, but the spot price at the time of sale is now US$1,300/oz — at/above US$1 200/oz.

Gold price at time of sale ..................... US$1,300/oz → above US$1,200 ⇒ 5%
Gross fair market value ........................ US$2,400,000
Royalty = 5% × 2,400,000 ....................... US$120,000

Identical value, but the price-triggered rate lifts the royalty from US$72,000 to US$120,000. This is why the timing of sales relative to the US$1 200 line is a genuine planning and audit point.

Example 3 — Small-scale gold miner, tiered SI 83/2021 rates

Mr. Chibanda, a small-scale miner, delivers 0.8 kg of gold to a gold-dealing-licence holder in a single calendar month. Assume a gold value of US$60,000 per kg for the month, so total value US$48,000. The first 0.5 kg is taxed at 1%; the excess 0.3 kg at 2%.

First 0.5 kg: value = 0.5 × 60,000 = 30,000 → 1% = US$300
Excess 0.3 kg: value = 0.3 × 60,000 = 18,000 → 2% = US$360
Total royalty .................................. US$660

His effective rate is 1.375%, blended across the two tiers — the structure deliberately keeps the marginal rate low to reward formal delivery.

Example 4 — Platinum concentrate valued via the LME 85% rule

Selous Platinum (Pvt) Ltd exports a parcel of PGM concentrate. The LME price of the refined platinum contained in the concentrate, on the transaction date, is US$5,000,000. Platinum concentrate is valued at 85% of the refined international price; the platinum rate is 7%.

International (LME) refined value ............... US$5,000,000
GFMV base = 85% × 5,000,000 .................... US$4,250,000
Royalty = 7% × 4,250,000 ....................... US$297,500

Had the parcel been exported as matte, the base would be 90% (US$4,500,000) and the royalty US$315,000. The miner may not reduce the base by smelting or refining cost — the 85%/90% haircut is the only recognised allowance for downstream processing.

Example 5 — Diamonds with the local-manufacturer discount

Marange Diamond Sales disposes of rough diamonds with a GFMV (per MMCZ contract) of US$10,000,000. The diamond royalty rate is 10%, so the royalty otherwise payable is US$1,000,000.

Scenario (a) — sold for export to a foreign buyer:

GFMV ........................................... US$10,000,000
Royalty = 10% × 10,000,000 ..................... US$1,000,000 (payable)

Scenario (b) — sold to a local diamond manufacturer at a discount equal to the royalty (US$1,000,000 off the price): under the Schedule, "no royalty is payable in respect of diamonds sold at a discount equivalent to the value of the royalty otherwise payable to any local diamond manufacturer." Royalty payable = US$0. The State forgoes the US$1m of royalty to keep beneficiation onshore.

Example 6 — Chrome, base metals, lithium and coal side by side

A diversified producer disposes of four products in one month. GFMV per MMCZ contracts: chrome US$2,000,000; nickel (a base metal) US$3,000,000; lithium US$4,000,000; coal US$1,500,000.

Chrome : 5% × 2,000,000 ....................... US$100,000
Nickel : 2% × 3,000,000 (base metal) .......... US$60,000
Lithium : 7% × 4,000,000 ....................... US$280,000
Coal : 2% × 1,500,000 ....................... US$30,000
Total royalty for the month .................... US$470,000

The lesson of the table: identical revenue carries very different royalty depending on the mineral. Lithium at 7% costs more than three times the royalty on the same value of nickel or coal at 2%.

Example 7 — The small-value rebate under Section 244(3)

A tributor's assessed monthly royalty on a small base-metal disposal works out to US$260.

Assessed royalty ............................... US$260
Falls in band US$200–US$300 ⇒ s244(3)(b):
Royalty payable = 3 × (260 − 200) = 3 × 60 ..... US$180

Had the assessed royalty been US$190 (≤ US$200), Section 244(3)(a) would give a full rebate — US$0. The provision shields very small producers from token charges while tapering the relief away above US$200.

Example 8 — Royalty and the income-tax computation (the deductibility interface)

Golden Reef (Pvt) Ltd (Example 1–2) has, for the 2025 year of assessment, mining income and other figures as follows. Mining royalties paid during the year total US$192,000 (US$72,000 + US$120,000 from the two parcels above, plus other months). Because the year is 2025, the royalty is deductible under Section 15(2)(f)(iii).

Gross income from mining operations ............ US$8,000,000
Less: allowable deductions (s15(2)) excl. royalty (US$5,000,000)
Less: mining royalty paid (s15(2)(f)(iii)) ..... (US$192,000)
Taxable income from mining ..................... US$2,808,000
Mining income tax @ 24% (company, item 14(2)(g)) US$673,920

Now contrast the 2017 year (royalty repealed for the period 1 Jan 2014 – 31 Dec 2019). The same US$192,000 of royalty would not be separately deductible under Section 15(2)(f)(iii):

Gross income from mining operations ............ US$8,000,000
Less: allowable deductions (excl. royalty) ..... (US$5,000,000)
Royalty paid: NOT deductible under s15(2)(f)(iii) — add back
Taxable income from mining ..................... US$3,000,000
Mining income tax @ 25% (2017 company rate) .... US$750,000

The royalty itself (US$192,000) was payable in both years; what changed is whether it also reduced the income-tax base. The 2025 treatment saves US$46,080 of income tax (24% × 192,000) that the 2017 treatment did not. This is the practical bite of the deductibility timeline — and the reason the year of assessment must be the first thing a practitioner checks.

The royalty jurisprudence is recent and ZIMRA-favourable on the gross base and collection-machinery points, but it also marks the limits of retrospective measures. The following are real, cited decisions referenced in the source statutes; foreign authority is labelled non-binding.

Afrochine Smelting (Pvt) Ltd v ZIMRA 24-HH-083 (High Court, 2024). This decision is annotated against Section 37 of the Finance Act at multiple points — the rates provision, the source-deduction agency in subsection (2), the civil-penalty provisions, and crucially subsection (9) (no deduction of beneficiation or processing costs from gross fair market value). Its significance for the student is that it anchors the "gross means gross" principle in litigated authority: a smelter cannot reduce the royalty base by the cost of smelting or processing. When a taxpayer argues that the "value of the mineral produced" should be net of the cost of producing it, Afrochine is the answer that the statute says otherwise.

Zimbabwe Platinum Mines (Pvt) Ltd v ZIMRA, Stanbic Bank, Minister of Mines and MMCZ 15-HH-169 (High Court, 2015). Cited against the collection machinery (Section 37A as it then stood), this litigation arose from the mechanics of deducting and remitting royalty at source through a bank and the MMCZ. It illustrates that the parties to a royalty dispute are not only the miner and ZIMRA but also the withholding agents (the bank, the marketing corporation), and that the obligations imposed on those agents are enforceable. For Zimplats — Zimbabwe's largest platinum producer — the case underlines how much turns on the source-deduction architecture.

Unki Mines (Pvt) Ltd v ZIMRA & Stanbic Bank 22-HH-729 (High Court, 2022). Referenced in the annotations to the in-kind and source-collection provisions, this matter sits against the backdrop of the 2022 measures that introduced royalties payable in part in kind and the controversy (noted by Veritas in the source materials) over whether retrospective collection by statutory instrument was constitutionally valid given Section 282(2) of the Constitution ("no taxes may be levied except under the specific authority of … an Act of Parliament"). The case is a caution that the in-kind royalty machinery, while now embedded in Section 37C, was contested in its origins.

Zimra v Murowa Diamonds (Pvt) Ltd 23-SC-085 (Supreme Court, 2023). The most important case for the deductibility limb. The source annotation records the principle directly: the 2014 repeal of the express royalty deduction in Section 15(2)(f)(iii) "does not affect the general formula for deduction of revenue expenditure." In other words, even in the 2014–2019 window when the specific royalty-deduction head was repealed, a miner could still argue that the royalty was deductible as ordinary revenue expenditure incurred in the production of income under Section 15(2)(a), subject to the general deduction rules and the prohibitions in Section 16. The case is a reminder that the repeal of a specific deduction does not necessarily extinguish a general one — a distinction that separates a competent adviser from a careless one.

For comparative context only, and non-binding in Zimbabwe: South African and Australian extractive-tax jurisprudence on the meaning of "gross value" and on royalty-versus-tax characterisation can be persuasive on interpretation, but Zimbabwe's royalty base is fixed by the express "no deduction of … costs whatsoever" language of Section 37(9) and paragraph 2(3), which leaves little room for importing a "net-back" valuation from foreign law.

1. Netting costs off the royalty base. The commonest and most expensive error is to apply the rate to a net figure — gross value less smelting, refining, transport or marketing costs. Section 37(9) and paragraph 2(3) forbid it; Afrochine confirms it. The base is gross fair market value, full stop. The only recognised "discount" to refined value is the 85%/90% PGM concentrate/matte rule, which is a valuation convention, not a cost deduction.

2. Using the wrong gold rate. Practitioners forget that ordinary-producer gold flips between 3% and 5% at the US$1 200/oz line, measured at the time of sale. Applying a single blended rate, or last year's rate, mis-states the royalty. For small-scale miners, the error is to ignore the SI 83/2021 tiers (1% on the first 0.5 kg, 2% above) or to apply small-scale rates to a producer who is not, in law, small-scale.

3. Treating the royalty as an income-tax deduction in the wrong year. Between 1 January 2014 and 31 December 2019 the express deduction in Section 15(2)(f)(iii) was repealed; from 1 January 2020 it was restored. Deducting the royalty under that head in 2016, or failing to deduct it in 2021, is a dating error that an auditor will catch immediately. (Remember Murowa: a general-deduction argument may survive even in the repealed window — but that is a different, harder argument, not the automatic statutory deduction.)

4. Missing the local-manufacturer diamond carve-out — in both directions. Forgetting that a diamond sale to a local manufacturer at a royalty-equivalent discount carries no royalty over-charges the client; conversely, claiming the carve-out where the discount does not match the royalty otherwise payable, or where the buyer is not a genuine local manufacturer, under-declares and invites penalty.

5. Ignoring source-deduction and remittance duties. Royalty is largely an agent-withheld tax. A miner who assumes the MMCZ or Fidelity has handled it, without confirming the return and remittance by the 10th of the following month, risks the primary civil penalty of double the royalty under Section 37(5) and the additional royalty under paragraph 5 of the Thirty-Seventh Schedule. The withholding agent's default does not necessarily relieve the miner.

6. Overlooking the small-value and domestic-use rebates. On marginal operations, the Section 244(3) ≤US$200 full rebate and the Section 244(4) wholly-within-Zimbabwe rebate can eliminate the charge. Failing to claim them over-pays; mis-claiming them (e.g., treating an export as domestic use) under-pays.

7. Confusing royalty with income tax in planning. Because royalty is on gross value and income tax on profit, reducing taxable profit (through capital redemption, for instance) does nothing to the royalty. A client who expects a capital-allowance claim to cut the royalty has misunderstood the architecture.

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.

• A mining royalty is the price for the State's mineral, not a tax on profit. It is charged on the value disposed of, regardless of profitability — Section 244 of the Mines and Minerals Act [Chapter 21:05], Section 36Q and the Thirty-Seventh Schedule of the Income Tax Act [Chapter 23:06], and Chapter VII of the Finance Act [Chapter 23:04].
• The rate depends entirely on the mineral. Memorise the Schedule to Chapter VII: diamonds/other precious stones 10%; platinum 7%; lithium 7%; other precious metals 4%; chrome 5%; gold 3%/5% (below/above US$1,200/oz) or 1%–2% small-scale; base metals, coal, coalbed methane, industrial metals, black granite, dimensional and quarry stone 2%.
• The base is gross fair market value with NO deduction of beneficiation, processing or any other cost (Section 37(9); paragraph 2(3) proviso; Afrochine 24-HH-083). The only processing concession is the PGM 85% concentrate / 90% matte LME-referenced valuation.
• Valuation authorities are prescribed: Fidelity Gold Refinery (gold), MMCZ contracts (diamonds and all other minerals, at the higher of contract-date or possession-date value), and the LME (PGMs).
• Royalty is withheld at source by the MMCZ and financial institutions and remitted by the 10th of the following month (Section 37(2)–(3)); late remittance triggers a double-the-royalty primary civil penalty (Section 37(5)) and an additional royalty (paragraph 5). The State may take royalty in kind through a Section 37C agent.
• Rebates at the margin: ≤US$200/month full rebate and a taper to US$300 (Section 244(3)); domestic-use rebate (Section 244(4)); beneficiation-plant rebate (Section 244(5)).
• The deductibility of the royalty for income tax turns on the year: deductible to 2013, repealed 2014–2019, restored from 1 January 2020 (Section 15(2)(f)(iii)); even in the repealed window a general revenue-deduction argument survives (Murowa 23-SC-085).
• Policy insight: Zimbabwe leans on royalties because they are a hard-to-avoid revenue floor beneath the elastic income tax, and it tilts the rates (lithium and platinum at 7%, the diamond local-manufacturer carve-out, small-scale gold tiers) to drive beneficiation and formalisation rather than raw-mineral export.

Table 1 — Royalty rates by mineral (Schedule to Chapter VII of the Finance Act [Chapter 23:04])

Table 2 — How the gross fair market value (GFMV) base is found (Thirty-Seventh Schedule, paragraph 2)

Table 3 — Royalty versus mining income tax

Diagram 1 — Determining the royalty payable

flowchart TD
 A[Mineral won from a registered location and DISPOSED of] --> B{Which mineral category?}
 B -->|Gold ordinary| C{Price at sale ≥ US$1,200/oz?}
 C -->|Yes| C1[Rate = 5%]
 C -->|No| C2[Rate = 3%]
 B -->|Gold small-scale| D[1% first 0.5kg; 2% excess - SI 83/2021]
 B -->|Diamonds/other precious stones| E[Rate = 10%]
 B -->|Platinum / Lithium| F[Rate = 7%]
 B -->|Chrome| G[Rate = 5%]
 B -->|Base/coal/industrial/granite/stone| H[Rate = 2%]
 C1 --> I[Find GFMV base]
 C2 --> I
 D --> I
 E --> I
 F --> I
 G --> I
 H --> I
 I --> J{Costs netted off?}
 J -->|NEVER - s37 9 / para 2 3| K[Apply rate to GROSS fair market value]
 K --> L{Monthly royalty ≤ US$200?}
 L -->|Yes| M[Full rebate - s244 3 a]
 L -->|No| N[Royalty payable; withheld at source; remit by 10th of next month]

Statutes & sections - Mines and Minerals Act [Chapter 21:05] — s244 (royalty on minerals won and disposed; small-value rebate s244(3); domestic-use rebate s244(4); beneficiation rebate s244(5)); s245 (fixing of royalty in the Schedule to Chapter VII of the Finance Act); s246 (meaning of "property"); s247 (approved beneficiation plant); s248–s249 (dump; experimental-use exemption); s251 (monthly returns and payment). - Income Tax Act [Chapter 23:06] — s2(1) (definition of "tax" includes mining royalty); s15(2)(f) and (f)(iii) (mining allowances in lieu; deduction of mining royalty paid — repeal 2014, re-insertion w.e.f. 1 Jan 2020); s36Q (charge of mining royalties, inserted by Finance (No.2) Act 7/2024 w.e.f. 1 Jan 2025); Thirty-Seventh Schedule (Mining Royalties) — para 1 (interpretation), para 2 (basis of calculation; PGM 85%/90%; gold via Fidelity; diamonds/others via MMCZ; gross-value proviso), para 3 (returns by 10th of following month; self-assessment), para 4 (estimated assessment), para 5 (additional royalty on default); Fifth Schedule (mining allowances — cross-reference). - Finance Act [Chapter 23:04] — s22Q (dominium in subsoil resources vests in the President); Chapter VII s37 (rates and collection; s37(2) source deduction by MMCZ/financial institutions; s37(3) remittance by 10th; s37(5) primary civil penalty of double the royalty; s37(9) no deduction of beneficiation/processing costs); s37A and s37B (collection and methodology — repealed by Finance (No.2) Act 7/2024 w.e.f. 1 Jan 2025); s37C (agents for collection of royalties in kind — MMCZ, RBZ, Fidelity Printers and Refiners); Schedule to Chapter VII (rates of mining royalties by mineral).

Regulations & SIs - Statutory Instrument 83 of 2021 — small-scale gold royalty tiers (1% first 0.5 kg; 2% excess), backdated to 1 Feb 2021. - Finance Act 8 of 2022; Finance (No.3) Act 13 of 2019; Finance (No.2) Act 7 of 2019; Finance Act 8 of 2015; Finance Act 7 of 2024; Finance (No.2) Act 7 of 2024 — successive amendments to rates, the deduction, and the charging/collection architecture.

Constitutional provision - Constitution of Zimbabwe, Section 282(2) — no taxes may be levied except under the specific authority of an Act of Parliament (relevant to the in-kind royalty controversy).

Case law (Zimbabwe) - Afrochine Smelting (Pvt) Ltd v ZIMRA 24-HH-083 — gross fair market value; no deduction of processing costs (s37). - Zimbabwe Platinum Mines (Pvt) Ltd v ZIMRA, Stanbic Bank, Min. of Mines & MMCZ 15-HH-169 — source-deduction and collection machinery. - Unki Mines (Pvt) Ltd v ZIMRA & Stanbic Bank 22-HH-729 — in-kind/source collection in the 2022 measures. - Zimra v Murowa Diamonds (Pvt) Ltd 23-SC-085 — 2014 repeal of the royalty deduction does not affect the general revenue-expenditure deduction.

ZIMRA / professional guidance - ZIMRA guidance on mining royalty returns and the Levy on Specified Minerals; Veritas commentary on the validity of retrospective in-kind royalty SIs (referenced in the Finance Act annotations).