Tuesday, 16 July 2024

DELTA LOSES LANDMARK TAX CASE

Delta Corporation has been ordered by the Supreme Court to pay taxes in foreign currency in a landmark ruling.

A three-judge panel of Deputy Chief Justice Elizabeth Gwaunza, Tendai Uchena and Samuel Kudya unanimously upheld a High Court decision rejecting Delta’s appeal that Zimra had improperly computed the company’s tax liability.

The Herald reports that, Justice Tendai Uchena agreed with High Court Judge Justice Joseph Mafusire’s October 2023 judgment, that Zimra imposed additional tax (a penalty) on the beverage making company after it had breached the duty to pay tax in foreign currency.

“The court is satisfied that a penalty for any outstanding foreign currency tax is payable in foreign currency and it also follows that a penalty on any outstanding local currency tax is payable in local currency.

“Therefore, the court a quo’s decision is correct. There is no irregularity or irrationality in the court a quo’s determination of the application placed before it by the appellant.”

The law provides that a company, trust or any juristic person is obliged to pay tax in the currency in which the income is earned, received or accrued.

Zimra had made additional income tax and value added tax assessments, penalties and interest of US$54.7m against Delta group entities for amounts they deemed should have been paid exclusively in foreign currency.

It argued that Delta “had neglected or omitted to remit its income tax in respect thereon in foreign currency, but had purported to pay it all off in local currency”.