The mining sector in Zimbabwe enjoys several fiscal incentives designed to encourage exploration, investment, beneficiation and exports. It’s crucial for mining companies (and their advisers) to understand these incentives, their limitations and how to factor them into operations. Below are key incentives and developments:

Corporate Income Tax & Lease‑specific rates

  • Holders of a Special Mining Lease (SML) are taxed at a special rate of 15% for their taxable mining income.
  • Other mining companies may be taxed at the standard corporate rate (24% plus AIDS levy, i.e., ~24.72%) in general.
  • However, note that from January 1 2025, tax relief for mining companies is set to end in order to push beneficiation efforts.

Capital Expenditure and Loss‑Carry Forward

  • Mining companies can deduct in full exploration, development and operations capital expenditure incurred “wholly and exclusively” for mining operations.
  • Assessed losses (tax losses) may be carried forward indefinitely in the mining sector.

Duty and VAT Relief on Imports / Capital Goods

  • Goods imported for exploration, development or operation may qualify for duty rebates, suspension of customs duties, and in some cases VAT deferment.
  • The investment policy states “rebate of duty on goods imported in terms of an agreement … suspension of duty on goods imported for specific mine development operations.”

Royalties and Value‑Addition Incentives

  • Royalties vary by mineral type (for example: gold ~5% for larger producers; precious stones 10%, base metals 2%) of gross value of mineral produced and sold.
  • The Government has offered tax breaks and incentives for mining companies that invest in local procurement, value addition/beneficiation rather than exporting raw minerals.

Currency & Tax Payment Flexibility

  • Mining companies are now allowed to pay taxes (including royalties) in Zimbabwe dollars (ZWL) to some extent, acknowledging the dual currency environment.

Recent Amendments & Compliance Focus

  • The Zimbabwe Revenue Authority (ZIMRA) and other institutions have launched a “deep‑dive” program in the mining sector to strengthen tax administration and compliance.
  • Amendments from the Finance (No. 2) Act 2024 include introduction of a 2% levy on certain minerals (lithium, black granite, quarry stones) and additional reporting obligations for mining entities.

What Your ERP Should Capture for Mining Tax Incentives

To fully benefit from these incentives and maintain compliance, your ERP (Enterprise Resource Planning) system must be configured to capture, track, report and control relevant data flows. Below are what your ERP should include and how to align it with mining incentives.

1. Capital Expenditure Tracking & Depreciation / Redemption Allowance

  • Model an asset register that captures the cost, nature (exploration vs development vs operations) of each piece of capital expenditure.
  • Tag assets as “eligible for full deduction” or “eligible for capital redemption allowance” (depending on mining vs general business). The mining sector allows full deduction or redemption allowance (e.g., for SML).
  • Configure depreciation/allowance schedules that reflect the incentive (e.g., full expense in year incurred or carry forward).
  • Ensure accounting ledgers link to tax modules so that capital allowances flow to tax computations.

2. Loss Carry‑forward and Tax Provisioning

  • Setup tax provision modules in ERP to handle indefinite carry‑forward of losses for mining companies.
  • Maintain separate accounting for taxed income vs non‑taxable allowances/adjustments, so tax reconciliation is transparent.
  • Link the tax provision to scenarios in which incentives might expire (e.g., 2025 changes) so you can simulate the impact.

3. Import Duty / VAT Relief / Customs Duty Suspension

  • Configure import modules on ERP to tag items under duty‑suspension or rebate eligibility (import capital goods for exploration/development).
  • Link purchase inflows to customs duty/ VAT accounting: the item’s cost base must reflect duty‑free or duty‑suspended status.
  • Maintain workflow approvals for imported equipment: ensure documentation (ministry certificate, mining lease certificate) stored in system.
  • Track the VAT deferment or rebate period (if any) and ensure entries reflect that the VAT is not payable or is deferred per regulation. E.g., VAT deferment up to 180 days or up to 3 years under some conditions.

4. Royalties and Mineral Sales & Value Addition

  • Configure revenue recognition modules to capture sales of minerals by type (gold, platinum, base metals, etc), the gross market value, applicable royalty rate.
  • Tag certain products for value‑addition/beneficiation incentives, so you can monitor whether tax breaks apply for local processing rather than raw export.
  • Ensure the system embeds the correct royalty calculation (gross value x rate) and what portion is deductible or not. Create reports on royalties by mineral, by month/quarter.
  • Monitor export arrangements: capturing the currency of sale (USD vs ZWL), and linking to tax/royalty obligations accordingly.

5. Multi‑Currency & Local Currency Tax Payment

  • Given Zimbabwe’s dual currency environment, ensure ERP supports multi‑currency transactions (USD, ZWL) for mining operations especially for foreign currency sales, imports, tax/royalty payments.
  • Configure tax modules to reflect when payments are allowed in ZWL (e.g., mining royalties partly payable in ZWL).
  • For foreign currency sales, track exchange gains/losses and ensure tax base is correctly calculated in ZWL if required (or in USD, per regulation).
  • Enable reporting of which taxes were paid in which currency, and link to supporting remittance evidence.

6. Audit Trail, Compliance Documentation & Reporting

  • Mining incentives often require proof (e.g., certificates of exploration, SML contracts, ministerial declarations) to support rebates/exemptions. Your ERP should allow document attachment to the relevant record (asset, import, expense, sale).
  • Maintain audit‑trail logs: when data is changed, who changed it, what the previous value was. This is useful given ZIMRA’s deeper audit focus in the mining sector.
  • Configure dashboards for tax/royalty compliance: open obligations, deadlines, rebate expiry, tax holidays nearing end, etc.
  • Provide exportable reports to support tax filings: capital allowance schedules, royalty summaries, duty‑free import summaries, tax loss carry‑forwards, export value breakdowns.

7. Cost Allocations & Eligible Expenditure Monitoring

  • Tag expenditures as “eligible wholly & exclusively for mining operations” versus general corporate cost. This is important because incentives apply only to such expenditure.
  • Flag capital expenditure used partly for mining vs non‑mining so that only eligible portion is claimed.
  • For local procurement and value‑addition incentives, tag procurement from local suppliers vs imports, and track value‑addition operations (e.g., processing minerals locally) to capture incentive eligibility.

Implementation Considerations & Best Practices

  • During ERP selection/implementation, ensure that modules for “tax engine” are configurable for mining sector specifics (royalties, capital allowances, exemptions).
  • Engage with your tax advisor/accountant early so that system parameters (allowance rules, royalty rates, currency treatment) are correctly set up.
  • Consider dynamic configuration: as regulations change (e.g., 2025 tax relief removal) your system should allow updates to tax rules without major re‑engineering.
  • Train finance, operations and procurement teams to correctly tag and classify transactions in the system—poor classification is a frequent compliance weak point.
  • Regularly audit your ERP data for eligibility: Are imports eligible for duty rebate correctly tagged? Are capital allowances being claimed under correct rules? Are royalties being correctly computed by mineral type and value?
  • Use ERP reporting to support your submissions to ZIMRA and mining regulatory authorities (licenses, leases, etc). Having data ready reduces audit risk and improves compliance posture.

Final Thoughts

The mining sector in Zimbabwe benefits from substantial tax incentives but these come with compliance obligations, documentation demands and risk of regulatory change. Your ERP must serve not just as a record‑keeping system but as a strategic tool to track incentive eligibility, support tax planning, monitor obligations (royalties, duties, currency flows) and provide audit‑ready reporting.

If your ERP is not capturing these mining‑specific dimensions (capital allowances, duty‑free imports, royalty calculations, multi‑currency, value‑addition tagging) you risk losing incentive benefits or facing compliance issues. Align your system architecture, data flows and reporting with the incentives regime and stay alert to regulatory changes that may alter eligibility.