Unki Mines (Pvt) Ltd v Zimbabwe Revenue Authority and Others

Unki Mines (Pvt) Ltd, a mining company holding a special mining lease, elected to maintain its books and records in United States dollars (USD) pursuant to paragraph 11(1) of the 22nd Schedule to the Income Tax Act. The company was also subject to the Reserve Bank of Zimbabwe (RBZ) retention scheme under section 4A(10) of the Finance Act, which required it to remit 25-30% of its foreign currency income to the RBZ for liquidation into local currency. The applicant submitted tax returns in USD but paid 25% of its tax in local currency based on the RBZ retention scheme. When the Zimbabwe Revenue Authority migrated to a new Tax and Revenue Management System (TaRMS), the system generated a USD 'debt' and a local currency 'overpayment' in the applicant's account. The applicant requested the ZRA to reallocate the local currency payments to the USD returns, arguing that section 4A(10) of the Finance Act permitted such payment. The ZRA refused, asserting that paragraph 11(2) of the 22nd Schedule required all tax to be paid in USD. The applicant then approached the court urgently seeking an interdict against the ZRA's collection measures.

• Whether the ZRA issued a valid tax assessment or whether a formal notice of assessment was required under sections 46, 47, or 51 of the Income Tax Act
• Whether paragraph 11(2) of the 22nd Schedule to the Income Tax Act or section 4A(10) of the Finance Act applies to the payment of tax by a special mining lease holder who elected to maintain books in USD
• Whether the contra fiscum rule should be applied in favor of the taxpayer due to alleged ambiguity
• Whether the generalia specialibus non derogant maxim applies to prioritize the specific provisions of paragraph 11 over the general provisions of section 4A(10)
• Whether the applicant satisfied the requirements for a final interdict

The provisional order granted on 2 December 2024 was discharged. The application for confirmation of the provisional order was dismissed with costs in favor of the first respondent (Zimbabwe Revenue Authority).

Where a holder of a special mining lease has elected to maintain its books and records in United States dollars pursuant to paragraph 11(1) of the 22nd Schedule to the Income Tax Act, all tax must be paid in United States dollars in accordance with paragraph 11(2), regardless of whether part of the taxable income has been liquidated into local currency under the Reserve Bank of Zimbabwe retention scheme established by section 4A(10) of the Finance Act. The specific provisions of paragraph 11 of the 22nd Schedule take precedence over the general provisions of section 4A(10) of the Finance Act by application of the generalia specialibus non derogant maxim. A self-assessment under section 37A of the Income Tax Act is deemed to be an assessment made by the Commissioner-General. A response by the ZRA to a taxpayer's request that relies on the taxpayer's own self-assessed returns does not constitute an additional assessment requiring formal notice under sections 46, 47, or 51 of the Income Tax Act. Tax statutes must be interpreted strictly according to their plain language without room for presumptions or intendment.

The court observed that the case may represent an instance where the Legislature, for want of foresight or other reasons, has failed to make specific provisions regarding the co-existence of paragraph 11 of the 22nd Schedule and section 4A(10) of the Finance Act. The court noted that it may be appropriate for the Legislature to attend to the necessary legislative framework 'in the spirit of ease of doing business and promoting investment in this country.' The court also noted the procedural irregularity where a court order existed that neither party was aware of or addressed in their submissions, requiring correction before the matter could properly proceed. The court expressed some sympathy for the apparent harshness of requiring a mining company to pay tax in foreign currency on amounts that have been compulsorily liquidated into local currency by the Reserve Bank, but emphasized that addressing such policy concerns falls within the province of the Legislature, not the courts.

This case is significant in Zimbabwean tax jurisprudence for several reasons: (1) it clarifies the application of the generalia specialibus non derogant maxim in the context of conflicting tax provisions, establishing that specific provisions for special mining lease holders override general tax provisions; (2) it reaffirms the principle of strict interpretation of tax statutes without room for presumptions, intendment, or equitable considerations; (3) it defines the scope and nature of self-assessments under section 37A of the Income Tax Act and clarifies when formal notices of additional or amended assessments are required; (4) it addresses the interaction between the Income Tax Act and the Finance Act in the context of the RBZ retention scheme; (5) it highlights a potential lacuna in the legislative framework regarding the taxation of foreign currency earnings that are compulsorily liquidated into local currency, signaling a need for legislative intervention to address practical challenges faced by mining companies; and (6) it demonstrates the limits of judicial discretion in tax matters where the statutory language is clear, even if the outcome appears harsh or unfair to the taxpayer.