LIVINGSTONE MARUFU
Zimbabwe Stock Exchange-listed brewer, Delta Corporation Limited, says it is worried that different tax interpretations could affect the company’s performance during the 2023 full-year results amid uncertainties created in the treatment of transactions for tax purposes.
Delta said there have been significant currency changes in Zimbabwe since 2018 but there is still an absence of clear guidelines and transitional measures thereby creating problems for the business.
“The financial outturn in F23 could be affected by the foreign currency tax assessments arising from differences in interpretation of the legislation on the currency of payment of certain taxes,” Delta company secretary Faith Musinga said in a trading update for the quarter ended December 31, 2022.
She said these changes create some uncertainties in the treatment of transactions for tax purposes.
There are further complications arising from the wording of the legislation about the currency of settlement of certain taxes which give rise to interpretations that may differ from those of the tax authorities, thereby creating uncertainties in tax positions, she said.
The Zimbabwe Revenue Authority has made some assessments that imply the rejection of the ZWL$ as legal tender for the settlement of tax obligations that they deem were payable in foreign currency.
These assessments are being objected to and challenged through the courts.
Despite these challenges, Delta recorded an increase in US$ sales thereby catapulting the group’s performance during the third quarter performance which ended December 31 2022 resulting in increased revenue.
“Group revenue grew by 44% for the quarter and 53% for the nine months in inflation-adjusted terms. This reflects the volume growth and the replacement cost-based pricing.
“The Zimbabwe businesses recorded a significant increase in the proportion of foreign currency sales during the quarter to beyond 70%. “There was a corresponding increase in the purchases settled in foreign currency, as the economy dollarised,” she said.
The lager beer volume grew by 17% for the quarter and 18% for the nine months compared to the same period last year.
Product supply was stable although there were intermittent gaps arising from outages in power, water supplies, mismatches in the demand and supply of brands and packs, the company said.
The sorghum beer volume in Zimbabwe grew by 11% for the quarter compared to the prior year and is up 12% for the nine months.
Natbrew Zambia continues to recover volumes, registering a growth of 11% for nine months, which includes some regional exports.
The volume at United National Breweries South Africa was flat for the quarter but grew by 21% for the nine months, reflecting the disruptions to operations arising from power cuts and reduced market service by resellers and distributors in response to fuel price escalations.
The sparkling beverages volume grew by 5% for the quarter and is up 14% for the nine months.
Musinga said the operating environment in Zimbabwe, although stable, remains challenging, as the country goes to the general elections scheduled for later in the year.
In the outlook, the group is focused on exploiting the opportunities arising from activities that generate aggregate demand such as infrastructure development projects, mining activities and diaspora remittances.
