Supreme Court Rules In Favour Of ZIMASCO, Blocks ZIMRA’s $7 Million Royalties Claim

The Supreme Court has released detailed reasons for a landmark judgment that clears ferrochrome producer ZIMASCO of paying millions in disputed mining royalties, delivering a major blow to the Zimbabwe Revenue Authority (ZIMRA).

The dispute dates back to a 2022 audit, when ZIMRA claimed that ZIMASCO had underpaid royalties on its exports of chrome products, arguing that royalties should have been calculated on the full invoice value, including logistics costs.

The tax authority also insisted that both chrome concentrates and ferrochrome, an alloy produced by smelting chromite ore, were subject to mineral royalties under the Mines and Minerals Act.

ZIMASCO challenged the claim, arguing that royalties at the time applied only to raw minerals, not processed products like ferrochrome.

The High Court agreed, ruling that no royalty rate had been prescribed for mineral-bearing products before January 2022, when parliament amended the Finance Act to extend royalties to such products.

Zimra appealed to the Supreme Court, but a three-judge panel, Justices Chinembiri Bhunu, George Chiweshe, and Joseph Musakwa, upheld the High Court’s decision.

The judges stressed a key principle of tax law: no tax or royalty can be imposed without clear statutory authority. Any ambiguity must be resolved in favour of the taxpayer.

The court also confirmed that ferrochrome, being a man-made alloy not found in nature, does not qualify as a “mineral” under the law. The judges ruled:

“Where a mineral is processed to the extent that it is converted into an alloy not found in the earth’s crust, it no longer retains its character as a mineral.”

The ruling shields ZIMASCO from liability for reassessed royalties totalling ZWL$604 million and US$7 million.

ZIMRA had tried to use later amendments to the law, including a 2024 retroactive expansion of the definition of “mineral,” to claim past royalties, but the court dismissed these arguments.

The judgement is seen as a significant victory for ZIMASCO and could encourage other miners who exported processed mineral products before 2022 to challenge royalty assessments.

More: ZimLive