Delta faces US$54.8 million tax dispute with Zimra

Nyashadzashe Ndoro

CHIEF REPORTER

Delta Corporation, the Zimbabwean beverage giant, is embroiled in a US$54.8 million tax dispute with the Zimbabwe Revenue Authority, Zim Now can reveal.

The disagreement centres on how much tax should be paid on transactions settled in Zimbabwean Dollars between 2019 and 2021.

According to Delta’s audited financial statements for the year ended March 31, 2024, Zimra argues that these transactions should have been settled exclusively in foreign currency. The company, however, maintains that their tax payments complied with legal requirements at the time.

Delta has challenged Zimra’s assessments through the courts and is confident of a favourable outcome based on the interpretation of the law at the time of settlement. To date, they have paid US$6 million under protest.

The company highlights the ongoing currency and legislative changes in Zimbabwe as creating uncertainties in how to handle tax obligations. This lack of clear guidelines has led to differing interpretations between Delta and Zimra.

“The Zimbabwe Revenue Authority has made additional Income Tax and Value Added Tax assessments, penalties and interest amounting to US$54.8 million, (for periods 2019 to 2021), against Group entities for amounts that were settled in Zimbabwe Dollars, but that Zimra deem should have been paid exclusively in foreign currency. No credit has been given by Zimra to the equivalent amounts already paid in legal tender of Zimbabwe. These assessments are being objected to and challenged through the courts and are at various stages of appeal,” the company said.

Further complicating the situation, Delta faces additional assessments for periods not yet audited by Zimra due to the legislative gaps.

Despite these challenges, Delta’s board maintains a going concern basis for the company. They point to reasonable growth in the Zimbabwean business despite the unstable macroeconomic environment and highlight their focus on cost reduction initiatives and sourcing strategies.

The company also faces an adverse opinion from its auditors due to non-compliance with International Accounting Standards related to foreign exchange rates and hyperinflationary economies.