Delta Corporation slams Zimra over uncertainties

Zimbabwe's largest beverage manufacturer, Delta Corporation Limited, has accused the country's tax authorities of fueling business uncertainty through what it described as the arbitrary creation of legislative positions not backed by formal law. The company says this growing trend is undermining its ability to plan, invest, and operate efficiently.

In its annual report for the period ending March 31, 2025, Delta expressed frustration over unclear tax policies and sudden regulatory shifts, which it says are negatively affecting the business environment. The company, which makes some of Zimbabwe's most popular soft drinks, beers and alcoholic beverages, highlighted the ongoing difficulty in navigating taxation frameworks and economic policies in a volatile policy landscape.

"A growing concern is the tax authorities' practice of creating their legislative positions through public notices, which may not be supported by enabling legislation," the company said. "This practice contributes to uncertainties, particularly when the tax positions adopted by the company concerning income tax and certain indirect taxes differ from those of the tax authorities."

During the year under review, Delta disclosed US$254,15 million in confirmed tax payments, including US$230,35 million in indirect taxes - such as value added tax (VAT), excise duties, and the recently introduced sugar surtax - and US$23,8 million in income tax. These represented annual increases of 19% for indirect taxes and a staggering 516,52% for income tax compared to the previous year.

In addition, the company is currently appealing additional tax assessments worth US$74,8 million in court. If these amounts are eventually enforced, Delta's total tax burden for the year would rise to US$329 million.

The company criticised a legal provision that allows the Zimbabwe Revenue Authority (ZIMRA) to collect disputed amounts while appeals are still pending in court, calling the practice burdensome and detrimental to operations.

"These taxation and legislative challenges necessitate careful navigation and robust tax planning to mitigate their impact on our business operations and financial performance," the report said.

Delta also decried the unpredictable nature of local fiscal policies, saying that sudden changes in taxes - such as the sugar surtax imposed on beverages - have triggered price hikes that have negatively impacted consumer demand and overall business performance.

"The recent introduction of a sugar surtax on beverages at levels above regional benchmarks has led to price increases that have undermined business performance," the company noted.

Delta further explained that the shift back and forth between the use of the Zimbabwe Gold (ZiG) and the multi-currency system was not accompanied by clearly defined transitional tax measures, creating additional uncertainty.

"This lack of clarity, along with complex and inconsistent legislative changes regarding the currency used for the settlement of certain tax obligations, has created significant challenges for businesses," the company stated.

Issues relating to exchange control, banking regulations, and digital payment systems were also cited as complicating factors affecting both product supply and consumer purchasing power. Delta warned that such unpredictability made it difficult to develop long-term business strategies.

"The policy environment remains unpredictable and impacts our ability to plan for the future," the report said. "Access to foreign currency and local digital money transfers are affected by currency management policies, which directly affect our ability to supply products and the ability of consumers to purchase them."

In response to the mounting tax and policy burdens, Delta revealed that it had been forced to adjust the prices of its products - a move that helped boost its revenue to US$807,47 million for the year, a 5% increase from the previous financial year.

The company also said regulations aimed at controlling distribution channels have disrupted supply chains and pricing models, further straining the beverage giant's operations.

As economic uncertainty continues to plague Zimbabwe's corporate sector, Delta's report serves as a pointed reminder of the broader challenges facing businesses operating under volatile fiscal and regulatory frameworks.