FC Platinum wins case against Zimra

BY DESMOND CHINGARANDE

FC PLATINUM Football Club has won its case against the Zimbabwe Revenue Authority (Zimra) which had sued it over tax arrears.

Platinum Company was registered in 2004 and on its registration it included the objects of the company that include operating and managing a football club which is registered with the Zimbabwe Football Association and Federation of International Football Association whose main objective is to provide recreation.

Zimra then audited FC Platinum’s books and decided that receipts and accruals were at law not exempt for income tax.

It then issued an assessment for income tax which prompted FC Platinum to object to the decision of the Zimra commissioner.

FC Platinum had submitted that its company is an association and it is operated for recreational purposes and that its receipts and accruals are not divided among its members other than remunerations for services rendered.

But Zimra had argued that an exemption is claimable by section 26 of the Zimra Act, which compels all incorporations to pay income tax.

Justice Nicholas Ndou then ruled that the fact that the activities of FC Platinum appeared commercial does not deprive it of its exemption from tax in respect of proceeds from its businesses.

“The fact that the appellant carries on commercial activities for a profit does not deprive it of its exemption status in terms of the Income tax. What is of importance is the purpose served by the proceeds from the commercial activities. It is common cause or at least beyond material dispute that the appellant channels its income to the football club,” Justice Ndou ruled.

He said the tax is imposed by Parliament not by the commissioner and if a transaction is covered by the terms of the section its provisions come into operation, if it is not then its provisions cannot be applied.

Zimra had argued that Platinum Company cannot be a company and at the same time be an association, but Justice Ndou ruled that there is no strict interpretation of the terms and that from the facts submitted CF Platinum discharged the onus to show that Zimra’s decision was
wrong.

Justice Ndou then granted the appeal by FC Platinum, set aside the decision by the Zimra commissioner and ordered that the receipts and accruals be exempt from paying income tax, that any tax paid by FC Platinum be refunded and each party bear own costs of the application.

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