Delta tax assessments hit US$97m

LIVINGSTONE MARUFU

Zimbabwe’s largest brewer, Delta Corporation, says the Zimbabwe Revenue Authority (ZIMRA)’s cumulative tax assessments have surged to US$97m in 2026 from US$73m in 2025, largely driven by additional claims relating to the 2021 year of assessment.

The escalating dispute stems from disagreements over local currency tax payments made by Delta during Zimbabwe’s turbulent currency transition period, with ZIMRA insisting that some obligations should have been settled in foreign currency.

Although Delta has already paid a substantial portion of the disputed amount under the “pay now, argue later” principle, close to US$100m remains under contention.

Delta’s chief executive officer Matts Valela warned that the tax assessments could have a material impact on the group’s operations if upheld in their current form.

“ZIMRA’s cumulative assessments against Delta Beverages and Afdis now stand at about US$97m, up from US$73m last year. The additional US$24m relates mainly to the 2021 year of assessment, which remains under review,” Valela said.

“Our view is that the 2021 assessment uses a turnover-ratio method that was not expressly provided for in the law at the time and on best available interpretations. We also believe SI 60 of 2024 should be applied, which could materially change the outcome once amounts already paid are recognised.”

Valela maintained that the group had complied with the tax laws applicable at the time.

“In 2021 and prior years, we paid our taxes in the legal tender of the day, at the rates required by law. Our view is that the principal obligations were settled, and these assessments revalue the liability side without similarly recognising the value already paid,” he said.

“We have already paid US$18.7m under the ‘pay now, argue later’ principle. The assessments are being contested through the courts and through amicable engagement with ZIMRA, and we will continue to pursue both processes constructively.”

The dispute highlights broader tensions between major corporates and the tax authority arising from Zimbabwe’s complex monetary reforms between 2019 and 2021.

Several listed companies and mining firms have also flagged retrospective tax assessments linked to currency conversion issues, exposing what industry players say are ambiguities within the country’s tax framework.

For the formal sector, the legacy tax exposures are increasingly becoming significant contingent liabilities that complicate financial planning and strain relations between large taxpayers and the revenue authority.

Valela said Delta management continues to engage ZIMRA and fiscal authorities in pursuit of an amicable settlement while simultaneously appealing key legal and factual aspects of the assessments with the support of tax experts and legal counsel.

He added that ambiguities within the tax legislation continue to create room for differing interpretations, heightening the risk of further disputes under the existing framework.

Despite the ongoing tax battle, Delta remains one of the country’s biggest taxpayers and continues to make significant fiscal contributions.

“Delta paid over US$306m in taxes in Zimbabwe during the year, up 37% on the prior year. Excise duty, sugar surtax, corporate tax, VAT and PAYE all grew in line with the business. As the business grows, its fiscal contribution also grows,” Valela said.

“When volumes grow, excise duty and sugar surtax receipts also tend to rise. In that sense, the Government’s fiscal interests and Delta’s commercial interests are closely aligned, both benefiting from a thriving formal beverages sector.”

The brewer delivered a strong financial performance during the period under review despite the tax-related headwinds.

Valela said the group is now in one of its strongest positions in recent years.

“Revenue exceeded US$1bn. Volumes reached historic highs. Dividends increased by 52%. Shareholders’ equity stood at US$394m,” he said.

“In Zimbabwe, foreign-currency turnover increased from 80% to over 94%. We continue to accept all currencies, including the ZiG, and we hope the new BiG5 notes will support wider circulation and acceptance.”

He noted, however, that regional operations continued to weigh on overall group performance, although management was making gradual progress in narrowing losses and improving sales volumes.

Delta’s profit after tax rose to US$151.85m during the period under review from US$112.04m recorded in the previous year.