THE Zimbabwe Revenue Authority (Zimra) has started executing its recently added mandate of deducting mining royalties, through banking institutions, on behalf of Treasury.
The tax authority said yesterday all mining entities and individuals should start complying with the new requirements for remitting mining royalties with effect from the 27th of last month.
Payment of mining royalties through Zimra is meant to make it easier for miners to remit royalties as the Minerals Marketing Corporation of Zimbabwe (MMCZ) remains under US illegal economic sanctions.
MMCZ was one of 16 entities placed under the ruinous economic sanctions by the US Office of Foreign Assets Control (OFAC) in 2008 over spurious allegations of contributing to undermining of democratic procedures and institutions in Zimbabwe.
The parastatal is the sole marketing agent for all Zimbabwean mineral exports except gold and silver. The OFAC can seize payments to any entities under US embargoes.
The US imposed sanctions on Zimbabwe in 2001 after joining on the side of the British Government that was fighting the country over unfilled bilateral issues that resulted in Zimbabwe embarking on a highly success land reform programme.
While other state entities, among them Industrial Development Corporation, ZB Holdings and Agriculture Finance Corporation (ex-Agribank) had sanctions lifted, MMCZ remained under the embargo probable because the role it plays in marketing the country’s mineral resources.
“All mineral exporters and financial institutions are hereby advised that, with effect from May 27, 2021, the responsibility to deduct and remit mining royalties to the Zimbabwe Revenue Authority shall be through financial institutions,” Zimra said.
A mining royalty is a sovereign right to receive payment based on a percentage of the value of mineral exported. Mining royalties are deducted as a percentage of the gross value of minerals shipped.
Diamonds and other precious stones are taxed at 10 percent, platinum 2,5 percent, other precious metals 4 percent, base and industrial metals 2 percent, coal 1 percent, black granite and other uncut dimensional stones 2 percent.
Zimra said banks will deduct mining royalties from payments received for mineral exports by mining firms or exporting persons, by crediting the business partner’s royalties account or receiver of the exports.
Authorised financial institutions shall remit deducted amounts on or before the 10th day of each month, following the month in which the deduction was made, the tax authority said in a statement.
When remitting the royalties, banking institutions will be required to prepare and submit a schedule of payments to the national tax authority on or before the 10th day of each month when the deduction was made.
“‘The mineral exporters shall be required to complete the return REV 5C and submit to Zimra on or before the 10th day of the month following the month in which they were deducted,’ the tax collector said.