Delta Corporation Limited (Delta) faces a tax bill of US$329 million for its financial year ending 31 March 2025, should it lose court appeals against US$74.8 million in additional tax assessments imposed by the Zimbabwe Revenue Authority (ZIMRA).
The additional tax assessments involve several issues, including exchange rate conversions, the US$0.001 sugar tax per gramme of sugar in beverages, value-added tax (VAT), excise duties, and income tax.
In an analyst briefing for the financial year ending 31 March 2025, Delta’s management outlined the company’s tax burden for shareholders.
Delta disclosed US$254.15 million in confirmed taxes, which include US$230.35 million in indirect taxes, covering VAT, excise duties, and the sugar tax, and US$23.8 million in income tax.
These figures represent increases of 19% for indirect taxes and a significant 516.52% rise in income tax compared to the previous year.
In addition to these confirmed liabilities, Delta is appealing an extra US$74.8 million in tax assessments.
If the company is unsuccessful in its appeal, the total tax burden for the period will increase to US$329 million.
During the presentation, Delta’s Chief Executive Officer, Matlhogonolo Valela, expressed concerns that ongoing disputes over tax liabilities and exchange rate policies were introducing significant financial uncertainties.
He revealed that the company is engaging with authorities to seek fair and sustainable solutions.
To manage these tax pressures, Delta adjusted the prices of its products, which helped the company achieve revenue of US$807.47 million for the period under review, marking a 5% increase from the previous year.
In a statement attached to the firm’s financial year report for the period ended March 31, 2025, Delta chairman Todd Moyo said:
This reflects the volume growth in Lager Beer and the sugar tax-induced price increases in sparkling beverages.
The proportion of domestic sales undertaken in foreign currency was around 80% for most of the year although there were periodic shifts in response to the performance of the formal retail sector which was affected by exchange rate disparities and the level of enforcement of the dual pricing regulations.
The increase, along with a 70.33% reduction in exchange losses to US$12.32 million, resulted in a profit after tax of US$116.14 million, a 16% rise from the previous year. Delta said:
The company is contesting the tax assessments issued by the Zimbabwe Revenue Authority for amounts that they consider to have been payable exclusively in foreign currency.
Additional assessments were received in November 2024 adding to those assessed in 2022, to bring the disputed amount to US$74,8 million (2024: US$54,8 million), which covers principal tax, penalties and interest for value added tax and income tax for periods 2019 to 2022.
Delta contends that the assessments fail to account for local currency payments made at the relevant time, which have since lost value due to inflation and currency depreciation.
Adverse judgments have been made by both the High Court and the Supreme Court, although there are appeals and new cases at various stages in the courts, including the Constitutional Court and the ZIMRA appeals processes.
As of 31 March 2025, the group paid US$11.4 million in accordance with the “pay now, argue later” principle and existing payment plans.
The company also said that it may use its substantial government-held Treasury Bills to settle any final tax liabilities.
More: NewsDay
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