Philemon Jambaya
Zim Now Editor
Beverage manufacturer, Delta Corporation Limited says it is facing a significant financial hurdle with a potential tax bill exceeding US$255 million looming over the next fiscal year.
In a statement Delta said the mounting liability stems from the impact of the sugar tax introduced in 2024 and ongoing tax disputes with the Zimbabwe Revenue Authority.
The sugar tax which is passed on to the consumer, initially set at US$0.02 per gram of sugar content in beverages, was subsequently reduced following industry-wide protests.
Minister Mthuli Ncube's announced that Treasury collected US$31 million from the sugar tax in 2024.
Delta also has ongoing disputes with Zimra.
The company is contesting tax assessments amounting to US$73 million, encompassing penalties and interest related to value-added tax and income tax from 2019 to 2022.
Delta contends that these assessments fail to acknowledge prior local currency payments, significantly devalued by inflation and currency depreciation.
After adverse court rulings, Delta is pursuing appeals in various courts, including the Constitutional Court.
Delta has already paid US$9.2 million in taxes based on the "pay now, argue later" principle and existing payment plans.
Assuming the company incurs similar existing tax obligations as the previous fiscal year – approximately US$142 million – the total tax burden could easily surpass US$255 million.
In the statement Delta said the tax issues have impacted on its revenue growth, which increased by 1% in the third quarter and 7% over the nine-month period versus double-digit growth figures recorded in previous years.
Delta says it is exploring various options, including utilizing its substantial Treasury Bills receivable from the government.
However, the company remains concerned about the ambiguities within the country's tax legislation, which significantly increases the risk of future disputes and interpretations.
Delta Corporation, with a market capitalization of US$695.95 million, is Zimbabwe's largest listed company.
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