Delta seeks revision of US$54.7m tax payment plan

Nyashadzashe Ndoro

Chief Reporter

Delta Beverages, a leading beverage manufacturer, is seeking a revision of the US$54.7 million tax payment plan imposed by the Zimbabwe Revenue Authority.

The tax dispute stems from payments made between 2019 and 2021. The dispute revolves around two key issues: the currency of payment and tax splitting. ZIMRA claims that Delta should have paid certain taxes in foreign currency, rather than local currency, and disputes the company's method of splitting taxes by currency.

Delta has already paid US$8.5 million towards the debt and is seeking a revised payment plan. The company argues that the tax assessments are unfair, require clarification, and should consider the financial health of the business.

According to Delta Beverages' unaudited financial information for six months ended 30 September 2024, the company is engaging with ZIMRA and the government to find a workable solution that recognises the social contract among stakeholders. The company is also exploring the possibility of offsetting part of the final assessments with financial instruments due from the government.

"The business believes that 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. We also contend that the authorities should allow a trading off with some financial instruments due from the government to offset any part of the final assessments that becomes payable," the company said.

"There are still areas that require clarity and adjustment in the assessments raised. While appealing certain areas of the assessments and judgments, with guidance from tax experts and legal counsel, management continues to engage with ZIMRA and the government to find a workable solution that recognises the social contract among stakeholders."

Meanwhile, Delta's latest update has shown an 11% increase in revenue to US$389 million.

However, management noted that the underlying revenue growth, adjusted for currency conversion distortions, was approximately 3%. The company's volume declined by 9% in its Schweppes Holdings Africa division, primarily due to price increases driven by the sugar tax.

Nampak Zimbabwe Limited, another subsidiary, reported a marginal increase in volume, despite being impacted by the depressed tobacco crop and reduced sales of packaging materials.

The company's profit before tax stood at US$55.8 million, while earnings before interest and tax were US$64.8 million.