Business Correspondent
The Zimbabwe Revenue Authority (ZIMRA) has intensified its tax enforcement efforts, significantly affecting Delta Corporation, the country’s largest brewer.
During a recent analyst briefing in Harare, Delta’s finance director, Alex Makamure, highlighted the financial strain caused by various tax obligations, particularly the sugar tax.
Delta accrued a total of US$20.5 million in sugar tax from February to September 2024, with an estimated total of US$32 million for the entire fiscal year. The breakdown of tax liabilities includes:
- Carbonated soft drinks: US$7.8 million
- Cordials/Juice: US$8.98 million
- Alcoholic beverages: US$0.18 million
These tax burdens have led to unavoidable price increases, which have negatively impacted volume growth. To mitigate these effects, Delta has implemented strategies such as adjusting pack sizes and moderating prices to cushion customers from the tax impact.
Delta is currently engaged in a dispute with ZIMRA regarding the currency of payment for certain taxes and the methodology for splitting these taxes by currency for the years 2019 to 2021. Following a Supreme Court ruling, Delta was ordered to pay US$54.7 million after losing an appeal to pay in local currency. The company has since appealed this decision to the Constitutional Court, arguing that ZIMRA’s positions do not consider the fair economic value of prior payments.
Despite these challenges, Delta reported a remarkable 85% increase in profit, reaching US$41.053 million for the six months ending September 30, 2024, up from US$22.13 million in the same period last year. Revenue also saw an 11% increase, totaling US$389 million.
Looking ahead, Delta aims to protect its balance sheet, optimize resource allocation, and generate positive cash flows to support ongoing capital projects and improve regional operations. The company is actively working to navigate the complexities of the tax environment while maintaining its market position.
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