Delta , ZIMRA tax dispute rages on

STAFF WRITER

Zimbabwe’s largest brewer, Delta Corporation is still embroiled in a tax dispute with the country’s tax collector, ZIMRA, a situation which could have a material impact on the viability of the group, Business Times can report.

The legal dispute arose from ZIMRA’s determination that Delta underestimated its tax.

 But, Delta is disputing the claim.

Delta group CEO, Matlhogonolo Valela, confirmed the latest development at the company’s analyst briefing yesterday.

“Other issues of interest are that of the dispute with ZIMRA on formula used  for splitting taxes  into currency  of payment. There was no credit given for amounts  paid in Zimbabwe dollars,” Valela said.

He added: “ZIMRA has made additional income tax and value added tax assessments, penalties and interest of US$54.7m against group entities  for amounts they deem  should have  been paid exclusively in foreign currency,” Valela said.

The law empowers ZIMRA to collect any  taxes based on their positions under the pay now, argue later principle.

The assessments are at various  stages  being  challenged on appeal and court processes. Based on the guidance  of tax experts and legal counsel, the board is of the  view that  the companies  acted within  the confines of existing  statutes, consequently  no provision has been  made  in the financial statements.”

He said the operating environment in Zimbabwe remains complex, with no easy solution  to the numerous  economic challenges such as the  currency instability and inflation in a difficult  political  environment.

The tax measures adopted in the 2024 national budget had far reaching  impacts on the business and the market in general.

The beverages sector has  been particularly affected by the hefty sugar tax  and restrictions on route to market.

In its financial results for the year to March 31, 2024, revenue for Delta grew 43% to US$767.87m from US$536.92m reported in the previous year.

Profit for the group grew to US$100.54m in the period under review from US$63.14m reported in the previous year.