Delta contests Zimra tax amount assessment
LISTED beverages giant, Delta Corporation Limited, is contesting the tax assessments issued by the Zimbabwe Revenue Authority (ZIMRA) for amounts that they consider having been payable exclusively in foreign currency.
The group revealed the issue in its trading update for the quarter ended 31 December 2024 where it noted that the tax authority’s assessments do not consider the local currency payments made at the relevant time, which have since been debased through inflation and currency depreciation.
According to Delta, the assessments have a material impact on the group’s operations, if they materialise as per the exact assessments.
The firm has said that additional assessments were received in November 2024 adding to those assessed in 2022, to bring the disputed amount to US$73 million, which covers principal tax, penalties and interest for value added tax and income tax for periods 2019 to 2022.
The company said adverse judgements have been made by both the High Court and the Supreme Court, although there are appeals and new cases at various stages in the courts including the Constitutional Court and the Zimra appeals processes.
The group had paid a total of US$9,2 million as at 31 December 2024 in line with the “pay now, argue later” principle and pre-existing payment plans.
The firm pointed out that it believes any revisions to the payment plan will be rational, with due consideration of the financial health of the business and the fact that the principal amounts were fully paid in legal tender at the relevant periods, based on the best available interpretation of the legislation.
Moreover, the group said it holds a significant amount in Treasury Bills receivable from the Government, which could be considered in the settlement of any tax liabilities that may finally be determined.
The group further noted reservations in the tax legislation which it said creates risks of further disagreements in interpretations and application to current taxes.
The company said management continues to engage with ZIMRA while appealing some legal and factual issues of the assessments and the judgments, with guidance from tax experts and legal counsel.
“The ambiguities in the tax legislation are pervasive, thereby creating risks of further disagreements in interpretations and application to current taxes,” said Delta.
It, however, expressed uncertainty on the timing of the resolution of the matter, citing that the current accounting treatment and disclosures of the assessments and the amounts paid so far are considered to be appropriate.-chroncile