DELTA Corporation Limited’s cumulative tax assessments from the Zimbabwe Revenue Authority (Zimra) have ballooned to about US$97 million, including liabilities linked to its associate, African Distillers (Afdis).
This marks a sharp escalation from the US$73 million reported last year, with a further US$24 million largely tied to the 2021 tax year — a period that remains a major flashpoint for the country’s largest brewer.
At the centre of the dispute is a fundamental disagreement over how past tax liabilities should be calculated and settled.
Delta argues that Zimra is retroactively applying apportionment methods, particularly the turnover-ratio method, which it says was not expressly provided for in law at the time.
For VAT, the brewer contends that Zimra relies on calculation methods introduced through public notices rather than legislation.
Delta maintains it fulfilled all obligations using the legal tender of the day, at exchange rates prescribed by law and based on the best available interpretation of the regulations.
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The issue, however, goes beyond Delta.
The core grievance is a revaluation methodology that companies say is fundamentally uneven: Zimra is re-indexing the US dollar liability side without similarly recognising taxes paid in local currency during that period.
These escalating assessments pose a significant threat to Zimbabwe’s corporate environment.
Under the “pay now, argue later” principle, companies are required to pay large sums upfront even while disputing assessments. Delta has already paid US$18,7 million under this arrangement.
Such forced outflows strain working capital and constrain investment and expansion.
More concerning is the precedent being set. By re-indexing historical liabilities without recognising prior payments, the tax system risks undermining the principle of nominalism.
In effect, it raises the possibility that no financial year is ever truly closed.
That creates a climate of permanent tax uncertainty, where businesses face reassessments years after revenue has been earned — a dynamic that inevitably deters investment.
The impasse comes despite repeated calls by Treasury leadership, including Finance minister Mthuli Ncube and Finance ministry permanent secretary George Guvamatanga, for dialogue and amicable resolution of complex fiscal disputes.
Delta says it remains committed to that approach, pursuing both legal channels and engagement with the Zimbabwe Revenue Authority and Treasury.
The company is also banking on Statutory Instrument 60 of 2024, which it believes could materially alter the outcome if historical tax positions are properly converted to ZiG and prior payments are recognised symmetrically.
The dispute is not isolated.
Several listed companies have raised similar concerns over retrospective tax assessments, reflecting broader tensions linked to Zimbabwe’s currency transitions between 2019 and 2021.
Innscor Africa, for instance, has objected to assessments and taken the matter to court, arguing that unsuccessful appeals should trigger refunds of previously paid Zimbabwe dollar amounts at prevailing values.
For the formal sector, these legacy exposures represent a significant contingent liability, complicating financial planning and straining relations between the State and its largest taxpayers.
The outcome of the Delta dispute will set an important precedent.
It will determine whether Zimbabwe moves towards fair-value inter-currency set-offs or continues down a path of aggressive retrospective re-indexation that risks undermining confidence in the tax system.
For now, Delta maintains that its obligations for 2021 and prior years were fully settled under the laws then in force.
Government must tread carefully.
How this case is resolved will send a clear signal about Zimbabwe’s commitment to fairness, predictability and investment security.