Mineral Royalty is charge under the Mines and Minerals Act Chapter 213 of the Laws of Zambia on any holder of large-scale mining licence, small-scale mining licence, gemstone licence, or artisan mining right for extracting the minerals from the earth. The Commissioner-General of Zambia Revenue Authority has the responsibility of administering and collecting the Mineral Royalty

Computation

Mineral Royalty is calculated based on the gross value of the minerals produced. For the purposes of computing Mineral Royalty ‘gross value’ is defined as “the realizable price for sale Free on Board at the point of export in Zambia or point of delivery within Zambia”

Rates

The mineral royalty rates as from 1st April 2007 are as follows:

(a) 3% of the gross value of base metals produced;

(b) 5% of the gross value of the gemstones or precious metals produced;

(c) 2% of the gross value of the minerals other than minerals referred to in (a) and (b) above produced.

For companies that entered into development agreements with the government, signed before 1st April 2007, the applicable rate is subject to renegotiations. The rate currently obtaining per development agreements is zero point six per centum.

Returns

Every holder of large-scale mining licence, small-scale mining licence, gemstone licence, or artisan mining right is required to submit a monthly mineral royalty return within fourteen days after the end of the month in which the sale of the minerals is done.

Failure to submit or late submission of the monthly mineral royalty return attracts penalty as follows:

(a) In the case of an individual one thousand penalty units (or K180,000) per month or part thereof; or

(b) In the case of a company two thousand penalty units (or K360,000) per month or part thereof.

Due Date

Mineral Royalty is due and payable within fourteen days after the end of the month in which the sale of minerals is done.

Failure or late payment of mineral royalty attracts penalty and interest in accordance with the provisions of Section 78 and 78A of the Income Tax Act Chapter 323 of the Laws of Zambia.

Deductibility of Mineral Royalty

Under the Income Tax Act the Mineral Royalty payable or paid is an admissible deduction in arriving at the gain and profits of a person carrying on mining operations.