Zimbabwe’s mining sector, the nation’s largest foreign currency earner, is undergoing a period of intense fiscal transformation driven by a series of legislative amendments aimed at maximising state revenue and promoting local beneficiation. Recent changes, primarily enacted through the Finance Act (No 7) of 2025, effective January 1, 2026, represent a deliberate policy shift that demands a new level of compliance and strategic planning from both established miners and potential investors. The analysis of these changes reveals a multi-pronged approach by the government to strengthen oversight, particularly regarding high-value strategic minerals like lithium and gold, while simultaneously attempting to foster domestic processing capabilities.
Key shifts in the tax and levy structure
The most immediate impact on mining operations stems from adjustments to levies and royalties. A significant change involves the levy on the gross value of sales for several key minerals. The levy has been increased from 1% to 3% on the gross value of the sale, whether domestic or export, for coal, lithium, black granite, quarry stones, and notably, coal has been explicitly added to this list, reflecting a broader revenue net.
Tiered Gold Royalty Structure, for gold producers, the previous flat-rate structure has been replaced with a tiered royalty system linked directly to the international gold price at the time of sale. For instance, a 3% royalty rate applies if the gold price is at or below US$1 200 per ounce, with higher rates kicking in as the price rises above this threshold This dynamic approach is designed to ensure the government captures a greater share of the “windfall” profits during commodity price upswings.
The Value Added Tax (VAT) framework has been tightened specifically for unbeneficiated minerals. For example, the export of unbeneficiated lithium ore now faces a 10% VAT levied on the gross fair market value, benchmarked against the value of realisable lithium sulphate. This signals a strong legislative push to disincentivise the export of raw materials in favour of local value addition
Beyond direct taxation, the new regime introduces administrative hurdles intended to formalise the sector and curb illicit financial flows. Mandatory Tax Registration, very critical in mining law, effective since January 2025, stipulates that any entity local or foreigner cannot acquire or transfer mining titles without first being a registered taxpayer with the Zimbabwe Revenue Authority (Zimra).This links the right to operate directly to tax comply. Transfer Pricing and Export Pricing new rules mandate a “quoted price method” for determining the transfer pricing of mineral exports, utilising reference prices from major metal exchanges. This is intended to strengthen oversight of mineral export pricing and prevent undervaluation.
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Industry implications: Investment vs revenue
The overarching goal of these changes is clear enhanced revenue mobilization from the extractive sector . However, analysts caution that the increased fiscal burden presents a complex challenge for industry profitability While the government aims to secure a greater share of mineral wealth, the industry has long cited the multiplicity of taxes and unstable fiscal frameworks as obstacles to growth. The introduction of new levies and the tiered royalty system, while dynamic, requires sophisticated financial modeling from miners to navigate the risk-return profile .
The success of this new tax regime hinges on striking a delicate balance capturing necessary revenue without stifling the investment required to sustain production levels, especially as global demand for critical minerals like lithium continues to increase.
The government’s willingness to review certain proposals, such as royalty structures following industry concerns, suggests an ongoing dialogue, but the current legislative direction firmly prioritises state revenue capture through a more complex and demanding fiscal landscape.
What is the meaning of fair market value in mining law?.
The Supreme Court of Zimbabwe has delivered a decisive ruling against Afrochine Smelting (Private) Limited, upholding the assessment made by Zimra regarding underpaid mining royalties from ferrochrome sales . The judgement affirms Zimra’s interpretation of the law and results in a substantial financial liability for the company, totaling over US$3 million plus nearly ZiG$98 million in local currency obligations. The court distinguished between gross fair market value and fair market value. Fair market value is not defined in the Finance Act. The ordinary grammatical meaning of the phrase “fair market value” is said to connote a value based on what a willing buyer and willing seller dealing at arm’s length on an open market would consent to.
Reference was made to the case of Sher No & Ors v Administration of the Transvaal 1990(4) SA 545 (AD) and an article by James Chen “ Fair Market Value (FMV):Definition and How to Calculate it” (updated September 23, 2023).The word “gross” is said to be defined as “total, whole, gross weight, profit etc. i.e. before deduction of tax etc. It was then concluded that gross fair market value would therefore mean a value based on what a hypothetical willing buyer and hypothetical willing seller dealing at arm’s length on an open market would agree as a whole and without any deductions being made on such value.
Tapera and Majachani in” Unpacking Tax Law and Practice in Zimbabwe” on page 277 ,it is asserted that mineral prices are set by reference to the international commodity exchange prices which do not contain a transport and insurance charge. The ruling made by supreme court provides essential clarity, confirming that Zimra’s interpretation of royalties must be based on the international market prices is legally sound in Zimbabwe’s mining law jurisprudence.
*Adam Mavhiko is a fourth-year law student at Midlands State University and is the vice-president at faculty of law association. Mavhiko is a passionate leadership trainer, researcher and has keen interest in changing the narratives of Africa through his writings and he writes in his capacity. He can be contacted on +263776026385.