Pixie DustZimbabwe’s largest beverages producer, Delta Corporation, is opposing a US$54.8 million tax claim, calling it unjust enrichment for the Zimbabwe Revenue Authority, Zimra. Delta, listed on the Zimbabwe Stock Exchange, disclosed this amid the complex tax landscape caused by currency fluctuations.
Delta disputes additional income tax and value-added tax assessments totalling US$54.8 million for the periods 2019 to 2021. Zimra imposed these assessments on settlements made in Zimbabwe dollars, insisting they should have been in foreign currency. Delta’s chairperson, Sternford Moyo, stated that the group is challenging these assessments in court because no credit was given for payments made in Zimbabwe dollars.
The principal amount settled in Zimbabwe dollars is equivalent to US$9.8 million for income tax and US$25.2 million for value-added tax. If Delta’s appeal fails, the refund might amount to just US$115,000 due to inflation, potentially leading to unjust enrichment for Zimra. This discrepancy could cost Delta US$54.6 million. Additionally, uncertainties arise from legislation regarding the currency of tax settlement, leading to differing interpretations between businesses and tax authorities.
The recent currency transition to ZiG in April further complicates matters, potentially exacerbating policy-induced uncertainties. Edwin Manikai, chairperson of National Foods Limited, highlighted the challenges from currency shifts, compounded by the lack of clear guidance from tax authorities.
Businesses, including members of the Employers Confederation of Zimbabwe (Emcoz), have expressed frustration over tax issues, such as a sugar levy dispute. Zimra’s attempt to collect the levy, initially set at US$0.002 per gram of sugar, even after revision to US$0.001, has sparked controversy among companies engaged in ongoing consultations over its implications.
