Individuals and companies responsible for remitting mining royalties to the Government of Zimbabwe could face up to six months in prison if they fail to do so within the stipulated timeframe, without a valid reason according to provisions in the new Finance Act, which recently came into effect, Mining Zimbabwe can report.
By Rudairo Mapuranga
The Act outlines strict guidelines for the timely remittance of royalties, and failure to comply by the given deadlines will result in accumulating interest. The interest rate, determined by the Minister of Finance, Economic Development, and Investment Promotion, begins accruing the day after the due date and continues until the outstanding amount is fully paid.
In exceptional cases, the Commissioner-General of the Zimbabwe Revenue Authority (ZIMRA) has the discretion to extend the deadline for remitting royalties without imposing interest. However, this is only applicable under special circumstances.
The Finance Act is clear on the penalties for non-compliance: “As soon as it comes to the notice of the Commissioner-General of ZIMRA that any person responsible for remitting royalties timeously (which requires that royalties be remitted in the form of the mineral concerned and part local currency and foreign currency) has failed to do so, the Commissioner shall serve upon that person notice to pay an amount equal to the amount of the royalties payable (hereinafter called ‘the primary civil penalty’).”
If the recipient of such a notice does not comply within the first seven days of the specified period (181 days), they will face an additional penalty. This secondary civil penalty amounts to either US$30 or the level 4 fine, whichever is lower, for each day they remain in default, up to a maximum of 181 days.
“If the person continues to be in default after the period specified in subparagraph (a) (181days), they shall be guilty of an offence and liable on conviction to a fine not exceeding level 10 or to imprisonment for a period not exceeding six months, or to both such fine and such imprisonment,” reads part of the Finance Act.
The penalties for non-payment do not end with civil fines. Both primary and secondary penalties owed by defaulters are considered debts due to ZIMRA. These can be recovered through legal proceedings in any court with competent jurisdiction, with the proceeds being directed to the Consolidated Revenue Fund.
In instances where the failure to pay royalties within the required time frame was not motivated by an intention to avoid or delay payment, the Commissioner-General of ZIMRA has the authority to waive any penalties or interest, either in part or in full. However, this is only applicable where the failure to pay is deemed to have occurred without intent to evade or postpone liability.
Regardless of any pending legal cases related to the non-payment of royalties, those responsible are still obligated to remit royalties on time to avoid penalties. Failure to comply could result in both civil and criminal charges, further emphasizing the seriousness of this legal obligation.
The Finance Act is designed to ensure strict compliance with royalty remittance in Zimbabwe’s mining sector, reinforcing the government’s commitment to securing revenue from the country’s natural resources.
