HARARE – The Zimbabwe Revenue Authority (Zimra) says the country’s mining tax regime must be reviewed, in the wake of shrinking royalties over the past year from the sector.
Zimra chairperson Willia Bonyongwe last week said the authority continued to hold discussions with government over the issue with the view that the current regime is unfair on miners.
“Zimra holds the view that the tax regime for miners must be reviewed.
“It continues to call on government to find a fairer way of taxing the mining sector so that the country, communities and mining companies can all benefit equitably from the finite mineral resources,” Bonyongwe said.
In the first quarter, mining royalties recorded a 45,3 percent negative variance with the $24,5 million target after $9 million was collected by the revenue authority from local miners.
This was a 31,8 percent slump on prior comparable period collections of $19,6 million.
“The performance of mining royalties was negatively affected by the slump in commodity prices due to the slowdown in global economies outside the United States of America,” Bonyongwe said.
She added that in future, the revenue head’s performance was going to be subject to mineral prices and local production levels, adding that mining royalties were also going to be subject to the mining fiscal regime.
Presently, mining royalties are charged in terms of the Mines and Minerals Act (Chapter 21:05).
According to the Zimra website, royalties are collectable from all the minerals or mineral-bearing products obtained from any mining location and disposed by a miner or on his behalf.
They are chargeable whether the disposal is made within or outside Zimbabwe.
Mining royalties are charged based on the face value of the invoice with diamond miners expected to cede 15 percent of their profit to the taxman.
Other precious stones surrender 10 percent; gold has a seven percent royalties charge as platinum miners deliver 10 percent to Zimra.
Other precious minerals owe the taxman four percent when they are done with their business as base metals give to Ceasar two percent, same as coal bed methane and industrial metals while coal attracts a one percent royalty fee.
Royalties deducted should be remitted to Zimra on or before the 10th day of the following month in which such deductions are made.
However, the tax head has been recording steady declines in the past year.
In the first half of 2015, Zimbabwe’s mining royalties missed the half year target by 39 percent on the back of depressed international mineral prices.
During the half year, mining royalties contributed $39,8 million against a target of $64,9 million, which translates to a negative variance of 39 percent.
This was a 65 percent decline in revenue collections compared to the same period last year were $112,6 million was collected.
Meanwhile, the country’s mineral earnings in the first quarter were down seven percent to $416 million from $452 million prior comparable period.
Despite having had a tough year in 2015, commodity prices for everything, from crude oil to industrial metals such as iron ore and copper have been plummeting.