BEVERAGE maker, Delta Corporation Limited (Delta) earnings are under severe threat from sugar tax and tax uncertainties after paying US$21,2 million relating to these taxes in its third quarter ended December 31, 2025, it has been revealed.
Delta is enjoying an unprecedented investor rally after adding over US$525 million in market capitalisation to a valuation of US$1,49 billion on the Zimbabwe Stock Exchange in the period under review.
Further, Delta’s increased stake in Schweppes to 69% from 49%, rising foreign currency earnings, and the rollout of key capacity expansion projects are expected to lift revenue to or beyond US$1 billion in the firm’s current financial year ending next month.
Hence, increased taxes threaten this renewed investor interest in its stocks and earning potential.
In its latest third-quarter report for the period ended December 31, 2025, Delta reported paying US$20,3 million in sugar tax and US$900 000 regarding tax uncertainties for a total of US$21,2 million.
“An equivalent of US$20,3 million was paid in sugar tax by Delta Beverages and Schweppes Zimbabwe during the year to date, compared to US$25,7 million in the prior period,” Delta said in the trading update.
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“The reduction relative to the prior year partly benefited the Schweppes business following the review of the sugar tax on cordials in January 2025. Notwithstanding this improvement, the sugar tax burden remains disproportionately high relative to earnings performance.”
Regarding tax uncertainties, Delta had paid US$14,6 million during the quarter in line with the ‘pay now, argue later’ principle, up from the US$13,7 million it paid during its half year period ended September 30, 2025.
“The group had paid US$14,6 million as of 31 December 2025 in line with the ‘pay now, argue later’ principle and existing payment plans,” Delta said.
“We expect that any revisions to the payment plan will be rational and guided by the national interest, recognising that the principal amounts were settled at the relevant times based on management’s best reasonable interpretation of the legislation at the time.
“It is also noted that the group holds US dollar-denominated government treasury bills which we hope will be accepted in settlement of any portion of the liability that may become finally payable to give relief to the company.”
The payment is regarding assessed additional foreign currency-denominated income tax, value-added tax, interest, and penalties for the periods 2019 to 2022 of US$73 million, which the taxman considers were payable exclusively in foreign currency.
Both the tax uncertainties and the sugar tax come as Delta is already experiencing growth in volumes.
This growth is expected to translate to improved revenues across its Zimbabwe operations, supported by currency stability, declining inflation, and improved availability of key raw materials.
Delta has already recorded revenue growth of 37% during its third quarter from its increased stake in Schweppes, lager and sorghum beer segments, sparkling beverages, wines and spirits, and foreign operations.
These efforts are also expected to be boosted by Delta having initiated key capacity expansion projects.
Consequently, these tax burdens threaten all Delta’s efforts.
“The company continues to engage with ZIMRA (Zimbabwe Revenue Authority) and the fiscal authorities in pursuit of an amicable resolution to the matters, while appealing key legal and factual aspects of the assessments with guidance from tax experts and legal counsel,” Delta said.
“These assessments have a material impact on the group’s operations, if upheld in their current form. Ambiguities in the tax legislation remain pervasive, increasing the risk of further interpretation disputes under the existing tax framework.”
Delta said it remained an exemplary taxpayer, always meeting its tax obligations in full and timeously across the various tax heads.
Delta is currently contesting these tax uncertainties while lobbying the government to make further reductions on the sugar tax.