HomeNewsDelta boss urges for Income Tax Act revision

Delta boss urges for Income Tax Act revision

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DELTA Beverages chief executive officer Pearson Gowero yesterday asked Parliament to consider revising the Income Tax Act to include exemption on share option schemes for the benefit of employees.

VENERANDA LANGA
SENIOR PARLIAMENTARY REPORTER

Gowero made the remarks when he appeared before the Parliamentary Thematic Committee on Indigenisation and Economic Empowerment to speak on whether the 5 000 Delta employees were benefiting from employee share ownership schemes as stipulated by the Indigenisation Act.

The committee, chaired by Harare Metropolitan Senator Cleveria Chizema (Zanu PF), was also told that although the company empowered its workers through its employees’ share schemes, the benefits were being eroded through taxation.

“The tax legislation regards the capital gain arising from the share schemes as taxable income which is subject to PAYE (Income Tax Act), but it is recommended that share option schemes just like any other employee share ownership schemes should be considered for tax exemption as they promote both indigenisation and employee empowerment,” Gowero said.

“Most employees, once empowered through the share schemes, prefer to sell their shares for cash to fund their personal needs, and the company has no control on how the employees deal with the shares they would have acquired through these schemes,” he said.

He said Delta Beverages was listed on the Zimbabwe Stock Exchange and, therefore, its shareholding changed everyday, and had 6 900 shareholders.

“Currently, about 33% shareholding is considered indigenous. Most shares trading on the ZSE are bought by foreign shareholders.

“The company has issued a total of 120 million shares to staff under the share scheme since 2009. About 50% to 60% of the shares are sold to cover the purchase cost and 20% to cover PAYE as any capital gains from sale of shares above $240 000 attracts PAYE at 51,5%. The employees have paid about $7,1 million in PAYE with respect to the capital appreciation of the shares. This appears to be inconsistent with the indigenisation and empowerment thrust,” he said.

Meanwhile, Schweppes management yesterday denied workers’ claims that the company had defied government’s worker empowerment policy.

Schweppes marketing and public relations executive Unaiswi Nleya, told the committee that 1 000 employees had benefited through housing schemes as the company was making profits.

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