
Delta engages ZIMRA,govt | Business Times
TENDAIISHE NYAMUKUNDA
Delta Corporation Limited, the country’s biggest brewer, is in negotiations with the tax collector, ZIMRA and government to find a workable solution to its thorny tax issues, Business Times can report.
It comes after the Supreme Court ordered Delta to remit US$54.7m in United States dollars after it lost its appeal to pay the taxes in local currency.
The latest development was confirmed by company secretary Faith Musinga, who said there were disagreements about the ways of splitting the taxes by currency for the period 2019 to 2021 as well as the currency in which certain taxes were to be paid.
However, ZIMRA insisted that the money was supposed to be paid as foreign currency.
“…. Management continues to engage with ZIMRA and the government to find a workable solution that recognises the social contract among stakeholders,” Musinga said.
She added: “At this stage, the board cannot estimate the likely outcome or timing of the resolution of these matters.
“Following the Supreme Court judgment, the company is in the process of reconciling certain positions with the regulator. The outcome of these engagements will determine the accounting treatment and recognition of the assessments and payments made to date.”
Musinga said whilst the recent court judgments in Delta’s case and other similar cases support ZIMRA’s position on the matter, there are significant legal and factual issues still to be addressed.
“ZIMRA is empowered to collect any taxes it deems due under the “pay now, argue later” principle. The Group had accumulated payments amounting to US$7m as of 30 June 2024 in line with this principle and as per agreed payment plans.
“We believe any revisions to the payment plan will be rational, taking into account the financial health of the business and the fact that the principal amounts were fully paid in legal tender at the relevant periods, based on the best available interpretation of the legislation,” Musinga said.
She continued: “There are also engagements with authorities on trading off some financial instruments that could offset the part of the final amount that becomes payable.
“There are still areas that require clarity and adjustment in the assessments raised.
“Management continues to engage with ZIMRA while appealing certain areas of the assessments and the judgments, with guidance from tax experts and legal counsel. These assessments have a material impact on the group’s operations, if they materialise as per the extant assessments.”
In its trading update for the quarter to June 30, 2024, Delta reported a 23% increase in revenue, compared to the prior comparative period.
While the volume of lager beer grew by 9% in the period under review , the volumes of sparkling beverages increased by 11% .
These were attributed to a delay in the implementation of the sugar tax-induced price increases and strong marketing campaigns.
Volumes in the sorghum beer category, however, decreased by 10% in the period under review compared to the previous year.
“This reduction was due to the cessation of exports to regional markets following the completion of capital projects in those countries and the onset of the drought. The category is also impacted by competition from hard spirits, our own increased lager beer supply, and investments by competitors in the same category. The sorghum beer category is the most affected by the drought due to lower consumer disposable incomes in rural markets and cost pressures on key cereals such as maize and sorghum,” Musinga said.
In the spirits and wines category, African Distillers Limited (Afdis) reported a 6% volume growth in the period under review.
Musinga added that with the launch of the Zimbabwe Gold (ZiG) during the period under review, Delta saw a decrease in their foreign currency collections.
‘’Collections of foreign currency through domestic sales have declined from an average of 80% in the prior year to 65% following the introduction of the ZiG currency and the strict enforcement of dual pricing at official exchange rates in the formal retail sector,” Musinga said.
She added :’’While some modest gains have been realised through the willing buyer, willing seller arrangement, this area remains a key focus in accessing the much-needed foreign currency to meet the group’s requirements and the deployment of the increased ZiG inflows
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