Zimbabwe's punitive taxes choking beer value chain

DELTA Corporation Limited has warned that policy inconsistencies, currency changes, rising taxes and other statutory obligations are undermining its value chain and the ease of doing business in Zimbabwe's beer and beverages industry.

Group finance director Alex Makamure told the Parliamentary Portfolio Committee on Industry and Commerce, during discussions on 2027 budget priorities last week, that the company's long-standing agricultural value chains were increasingly coming under pressure.

Makamure said Delta had supported agricultural production through contract farming since 1947, but the sustainability of the model was being threatened by the prevailing policy and tax environment.

He said the company remained one of Zimbabwe's major taxpayers, with fiscal contributions from excise duty, income tax and value-added tax rising from US$251 million in 2024 to more than US$300 million in 2025.

However, Makamure argued that the tax burden was limiting the resources available for reinvestment, noting that beer attracts excise duty of 40 percent.

He said Delta had grown its business by 40 percent since 2022, supported by a period of relative stability, but was now facing a retrospective tax bill of about US$100 million relating to the 2019–2022 period.

According to Makamure, the dispute arose from currency conversion rather than the company's failure to pay its taxes.

He said taxes paid in local currency had subsequently been assigned a zero value following currency changes, resulting in demands for the same obligations to be settled again in foreign currency.

Delta also raised concerns about tax compliance procedures, echoing issues highlighted by the Confederation of Zimbabwe Industries (CZI).

Makamure said the Zimbabwe Revenue Authority (ZIMRA) was requiring businesses to submit separate tax returns in local and foreign currency, despite what he described as provisions in the VAT Act requiring a single return.

"Compliance is being driven by public notices, not regulations as required under Section 78, forcing taxpayers into a computerised system that allows no flexibility even where there is no supporting legislation," he said.

The company also expressed concern over the sugar tax, saying the levy had contributed to sustained losses in its sparkling beverages unit over the past two years.

Makamure said Delta had tried to absorb the impact by maintaining prices, adjusting package sizes and offering smaller quantities to consumers at affordable price points.

He said the company maintained a US$1 price for four packs through 2024 before reducing its bottle size from 500 millilitres to 440ml and subsequently to 350ml to sustain a US$1 price for two units.

The cost of sugar had increased from US$800 to US$1 800 per tonne, inclusive of tax, making local production increasingly uncompetitive against imported products that allegedly benefited from concessions or avoided taxation.

Makamure warned that the situation required urgent attention in the 2027 National Budget to prevent further pressure on the beverages business.

He also highlighted the impact of a five percent withholding tax on purchases from unregistered traders, saying the measure was affecting Delta's distribution network of 350 trucks.

According to Makamure, bottle stores classified as informal were becoming more difficult to supply under the tax arrangements, placing additional pressure on distribution costs and potentially pushing up prices.

He warned that Delta would be forced to take drastic measures if the sugar tax was not addressed in the next budget.

The parliamentary committee is chaired by Zaka South legislator Clemence Chiduwa.

Delta's submissions come as industry players seek policy consistency, predictable taxation and measures to improve the competitiveness of locally manufactured products amid mounting production and operating costs.