Business / Companies
Zimplats gets tax penalty reprieve
03 Feb 2014 at 15:46hrs | Views
Platinum producer Zimplats says Zimra has granted it a reduction in the penalty in its tax dispute from 8% to 5% of principal tax.
"The tax authorities have responded to the objection lodged by the company in September 2012 against the levying of penalty and interest on the prior years' tax liability.
"A reduction in the penalty from 8% to 5% of principal tax has been granted, but the objection against the payment of interest rejected," said Zimplats in a statement accompanying quarterly results for the period to December 31 2013.
The platinum producer, however, added that an appeal has been lodged with the Special Court for Income Tax Appeals against the Commissioner-General's determination on the penalty, while an application will be made to the High Court to review the Commissioner-General's determination on the interest.
Zimplats has been embroiled in a tax dispute with Zimra after the latter issued an amended assessment a few years ago for additional profit tax on the company, which launched an objection on the basis that additional profit tax is not payable in terms of an agreement entered into with the Zimbabwean Government. Zimplats lost that battle and the effects were apparent on the company's latest financial results.
The company registered a profit before tax of $16 million, an 80% decrease on the prior period's $80 million. After bringing to account tax charges from prior years, a loss after tax amounting to $6 million was incurred compared to a profit of $68 million for the previous period.
But it was more than tax issues that weighed down its financial performance.
Lower volume of metal sales resulted in depressed turnover for the six months amounting to $176 million, down 23% on $231 million for the comparative period. The effect of a 1 January 2012 increase in royalty rates was offset by the reduced sales revenue. Zimplats has disputed this increase in the royalty rate, and the case is still before the courts. In terms of metal production, ore mined totalled 2 370 000 tonnes, up 4% on the comparative period last year.
Ore milled at 2 181000 tonnes was 1% above the tonnage for the same period last year owing mainly to higher running time achieved at both concentrators.
Mill grade was in line with expectations while concentrator recovery at 82.5% was good and in line with the prior year 4E metal production in converter matte totalled 81 522 ounces, a decrease of 56% on the previous year's production. Metal prices have remained depressed although there has been some recent improvement in response to the problems experienced by the major PGM producers in South Africa.
Meanwhile, the company says it has so far expended $299 million for its Phase II expansion project, with $76 million having been spent during the half-year.
"The tax authorities have responded to the objection lodged by the company in September 2012 against the levying of penalty and interest on the prior years' tax liability.
"A reduction in the penalty from 8% to 5% of principal tax has been granted, but the objection against the payment of interest rejected," said Zimplats in a statement accompanying quarterly results for the period to December 31 2013.
The platinum producer, however, added that an appeal has been lodged with the Special Court for Income Tax Appeals against the Commissioner-General's determination on the penalty, while an application will be made to the High Court to review the Commissioner-General's determination on the interest.
Zimplats has been embroiled in a tax dispute with Zimra after the latter issued an amended assessment a few years ago for additional profit tax on the company, which launched an objection on the basis that additional profit tax is not payable in terms of an agreement entered into with the Zimbabwean Government. Zimplats lost that battle and the effects were apparent on the company's latest financial results.
But it was more than tax issues that weighed down its financial performance.
Lower volume of metal sales resulted in depressed turnover for the six months amounting to $176 million, down 23% on $231 million for the comparative period. The effect of a 1 January 2012 increase in royalty rates was offset by the reduced sales revenue. Zimplats has disputed this increase in the royalty rate, and the case is still before the courts. In terms of metal production, ore mined totalled 2 370 000 tonnes, up 4% on the comparative period last year.
Ore milled at 2 181000 tonnes was 1% above the tonnage for the same period last year owing mainly to higher running time achieved at both concentrators.
Mill grade was in line with expectations while concentrator recovery at 82.5% was good and in line with the prior year 4E metal production in converter matte totalled 81 522 ounces, a decrease of 56% on the previous year's production. Metal prices have remained depressed although there has been some recent improvement in response to the problems experienced by the major PGM producers in South Africa.
Meanwhile, the company says it has so far expended $299 million for its Phase II expansion project, with $76 million having been spent during the half-year.
Source - BH24
