Govt issues Zimplats $28m garnish order

So far, over $7 million has been deducted from the mining firm’s bank accounts as a result of the Zimbabwe Revenue Authority order.
The order was served on Stanbic Bank on 16 November last year and by 21 November the same year, it had remitted to Government $7 209 476 from Zimplats’ accounts.
But Zimplats is contesting the order. The mining giant lost its bid to have the High Court urgently quash the Zimra garnish order and force the authority to return the $7 million already deducted.
High Court judge Justice Francis Bere ruled that the matter was not urgent. It will now be pursued as a normal court application.
The law requires all miners to remit royalties to the State based on production.
Royalties are set as a percentage of gross production, regardless of profits and are premised on the Government of Zimbabwe owning all the mineral rights, having bought them off the BSA Company in the 1930s.
Other taxes are profit based.
The Zimra position is that when the Finance ministry took over the setting of royalties in 2009 rates were increased from 2,5 percent to 3,5 percent.
In 2010, Zimra argues, the rates were increased to five percent but Zimplats reportedly continued remitting royalties using the old 2,5 percent rates leaving arrears.
With effect from this month the new mining royalties’ rate was increased to 10 percent.
In the court papers, Zimplats chief finance officer, Mr Patrick Museva Shayawabaya argued that Zimra acted unlawfully when it issued the garnish order adding that the figure of $28 million was still in dispute.
It is Zimplats’ argument that the calculations were erroneous.
They also argue that in terms of the Mines and Minerals Act, the mining agreement should be used under the circumstances and not a garnish order on the strength of provisions from the Finance Act.
The company submitted that the $7 million already captured was seriously affecting its operations.
Scanlen and Holderness law firm is representing Zimplats while Zimra’s internal legal department is acting for the authority.
Zimra regional manager for domestic taxes, Mr Moses Madongorere defended the taxman arguing that the authority’s actions were lawful and in compliance with the statutes.
He stated in an affidavit that despite a contest by Zimplats, the debt continues to escalate.
Mr Madongorere said the rates being used were set by Parliament and not by Zimra and that Zimplats was trying to challenge Parliament’s decision.
He maintained that the calculations used in arriving at the figure of $28 332 270 were correct.