ZIMBABWE’S largest beverage maker, Delta Corporation, has warned that uncertainty over how authorities interpret tax rules during the country’s turbulent currency transition is becoming a greater threat to investment confidence than the tax burden, as the company contests a US$97 million claim from tax authorities.
The dispute with the Zimbabwe Revenue Authority (Zimra), tied to currency-based tax obligations dating back to the country’s 2019-22 monetary upheaval, has intensified scrutiny of Zimbabwe’s policy credibility at a time when the government is seeking to attract fresh capital and restore investor confidence.
It also comes as Delta’s effective tax rate rose sharply to 27,6% from 16,6%, fuelling broader concerns among investors and business leaders that policy inconsistency, retrospective regulatory action and prolonged currency instability are increasing the risks and costs of operating in Zimbabwe.
In an interview with NewsDay, Delta group treasurer Tumai Mafunga said the dispute carried implications extending beyond the company, warning that investor confidence depend as much on policy predictability as it does on macroeconomic stability.
“The broader implication is that tax certainty matters as much as macro-economic stability,” Mafunga said.
“Investors can absorb tax cost.
Keep Reading
- Environmentalist in12 000km protest ride
- Chibuku NeShamwari holds onto ethos of culture
- Chibuku NeShamwari holds onto ethos of culture
- Health talk: Covid-19: Zim should brace for fifth wave
“What undermines capital allocation is uncertainty over how rules will be interpreted, whether they will be applied consistently and whether positions taken in good faith under the legal framework of the day can later be revisited on a different basis.”
Mafunga said the sharp rise in Delta’s effective tax rate and the Zimra assessment were “two distinct matters that should not be conflated”, stressing that the higher tax charge reflected accounting and structural tax factors rather than compliance failures.
“The increase in the effective tax rate is principally driven by two factors,” Mafunga said.
“First, a reduction in capital allowances against a growing revenue and profit base.
“Second, in prior periods some tax heads were settled in local currency, benefiting from the lower applicable official exchange rates.
“These rate distortions have now reduced, thereby aligning the tax rate to the United States dollar reporting currency base.”
Zimbabwe abandoned a decade-long dollarised regime in 2019 before partially reversing course after inflation and currency volatility spiralled, forcing businesses to navigate multiple exchange-rate systems, changing legal tender rules and shifting monetary directives.
Mafunga described the US$97 million assessment as “a legacy dispute from the 2019 to 2022 currency-transition period”, maintaining that Delta had settled its obligations “in the lawful currency applicable at the time”.
“The present dispute centres on technical questions of methodology, currency of settlement, allocation and attribution as well as the risk of retrospective interpretation being applied to transactions undertaken under a different monetary framework.”
The case is being closely watched by investors and corporate executives, many of whom see it as a critical test of whether Zimbabwe can provide predictable, transparent and consistently applied rules for formal sector businesses.
Analysts say retrospective tax claims linked to periods of policy ambiguity risk reinforcing perceptions that regulatory exposure in Zimbabwe can remain open-ended long after transactions have been concluded.
While authorities have intensified efforts to widen tax collection and stabilise public finances, business leaders argue that inconsistencies between fiscal, monetary and regulatory policy continue to complicate long-term planning and discourage investment.