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Delta challenges US$73 million tax assessments by ZIMRA
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LISTED beverages giant, Delta Corporation Limited, is contesting tax assessments issued by the Zimbabwe Revenue Authority (ZIMRA) for amounts the company believes should have been payable exclusively in foreign currency.
In its trading update for the quarter ended 31 December 2024, Delta disclosed that ZIMRA's assessments do not account for local currency payments made at the time, which have since been eroded by inflation and currency depreciation. The company highlighted that these assessments could significantly impact its operations if implemented as currently structured.
Delta revealed that additional tax assessments were issued in November 2024, adding to those from 2022, bringing the total disputed amount to US$73 million. This figure comprises principal tax, penalties, and interest related to value-added tax (VAT) and income tax for the periods between 2019 and 2022.
Despite adverse rulings from both the High Court and the Supreme Court, Delta is pursuing appeals and legal proceedings at various levels, including the Constitutional Court and ZIMRA's internal appeal processes. The company had already paid US$9.2 million by 31 December 2024 under the "pay now, argue later" principle and existing payment plans.
Delta expressed confidence that any revisions to the payment plans would be fair, taking into account the company's financial health and the fact that principal tax amounts were originally settled in legal tender, based on the best available interpretation of the law. The company also holds a significant amount in Treasury Bills from the Government, which could potentially be used to settle any final tax liabilities.
The company further raised concerns over ambiguities in Zimbabwe's tax legislation, which it says create ongoing risks of disputes over interpretations and applications of tax laws. Delta emphasized that its management continues to engage with ZIMRA while seeking guidance from tax experts and legal counsel on the matter.
"The ambiguities in the tax legislation are pervasive, thereby creating risks of further disagreements in interpretations and application to current taxes," Delta stated.
While the company remains committed to resolving the dispute, it acknowledged uncertainty regarding the timeline for resolution. However, it assured stakeholders that its current accounting treatment and disclosures regarding the assessments and amounts paid are appropriate.
In its trading update for the quarter ended 31 December 2024, Delta disclosed that ZIMRA's assessments do not account for local currency payments made at the time, which have since been eroded by inflation and currency depreciation. The company highlighted that these assessments could significantly impact its operations if implemented as currently structured.
Delta revealed that additional tax assessments were issued in November 2024, adding to those from 2022, bringing the total disputed amount to US$73 million. This figure comprises principal tax, penalties, and interest related to value-added tax (VAT) and income tax for the periods between 2019 and 2022.
Despite adverse rulings from both the High Court and the Supreme Court, Delta is pursuing appeals and legal proceedings at various levels, including the Constitutional Court and ZIMRA's internal appeal processes. The company had already paid US$9.2 million by 31 December 2024 under the "pay now, argue later" principle and existing payment plans.
Delta expressed confidence that any revisions to the payment plans would be fair, taking into account the company's financial health and the fact that principal tax amounts were originally settled in legal tender, based on the best available interpretation of the law. The company also holds a significant amount in Treasury Bills from the Government, which could potentially be used to settle any final tax liabilities.
The company further raised concerns over ambiguities in Zimbabwe's tax legislation, which it says create ongoing risks of disputes over interpretations and applications of tax laws. Delta emphasized that its management continues to engage with ZIMRA while seeking guidance from tax experts and legal counsel on the matter.
"The ambiguities in the tax legislation are pervasive, thereby creating risks of further disagreements in interpretations and application to current taxes," Delta stated.
While the company remains committed to resolving the dispute, it acknowledged uncertainty regarding the timeline for resolution. However, it assured stakeholders that its current accounting treatment and disclosures regarding the assessments and amounts paid are appropriate.
Source - The Chronicle
