African Distillers Limited (Afdis) has paid US$690,000 in additional tax assessments to the Zimbabwe Revenue Authority (Zimra) for the financial year ended March 31, 2026.
This 61.05% increase highlights the mounting pressure of retrospective tax claims currently weighing heavily on corporate balance sheets across Zimbabwe.
The beverage manufacturer’s total payments reached US1.13 million the previous year.
This emerging financial burden comes as Zimbabwe’s largest firms already contend with heavy compliance costs, policy inconsistencies, bureaucratic red tape, exchange rate volatility, and shrinking liquidity.
The core of the dispute lies in the currency of payment for specific taxes and the methodology used to apportion liabilities between local and foreign currency.
Legal analysts contend that the VAT compliance framework for multi-currency transactions rests on what they describe as a “legally defective foundation,” potentially invalidating significant assessments issued by Zimra.
Critics suggest the system’s structure is flawed because it originates from public notices issued by the Zimra commissioner-general rather than from formal statute or regulation.
Legal experts argue these notices are ultra vires, lacking the legislative authority required to impose new tax obligations or amend existing laws enacted by Parliament.
In its latest financial report, Afdis addressed the ongoing friction.
“As previously reported as at 30 September 2025, there were certain areas of disagreement regarding the currency of payment for certain taxes and the methods of splitting the taxes by currency for the period 2019 to 2022,” the company said.
“The Zimbabwe Revenue Authority issued income tax assessments, including penalties and interest against the Company amounting to US$1 841 221.”
Zimra insists these amounts must be paid exclusively in foreign currency, further contending that taxes originally paid in local currency should be refunded only in “debased nominal values.”
While a recent court judgment in a similar case—Delta vs Zimra—supported the tax authority’s position, Afdis maintains there are “significant legal and factual issues still to be addressed.”
Despite these objections, Zimra remains empowered to collect any taxes it deems due under the contentious “pay now, argue later” principle.
By March 31, 2026, Afdis had accumulated payments of US$1,820,221 in line with this principle and through agreed payment plans.
However, management noted that “there are still areas that require clarity and adjustment in the assessments raised.
Treasury maintains that the obligation to remit taxes in the currency of trade has been clear since 2019.
Officials have dismissed corporate objections as “selective compliance” driven by convenience rather than law, warning that the fiscus will not be held hostage by “technicalities” should the matters proceed to court.
Afdis management continues to engage with Zimra while appealing specific areas of the assessments with guidance from tax experts and legal counsel.
The firm warned that these assessments could have a “material impact” on operations if they materialise in their current form.
“The outcome of these engagements will determine the accounting treatment and recognition of the assessment and payments made to date,” the company stated.
The company’s advisors noted that while settling interest and penalties—amounting to US$588 247—might require an outflow of resources, such an outcome is currently deemed “improbable.”
Afdis is far from alone in this predicament. Its largest shareholder, Delta Corporation Limited, was hit with a US13.7 million under the “pay now, argue later” rule. Similarly, Innscor Africa Limited received a US5.15 million.
These cases underscore the widening exposure of Zimbabwean corporates to retrospective tax risks.
Companies are increasingly forced to make significant upfront payments while contesting the underlying methodology and legal basis of the assessments, effectively turning historic tax periods into live risks for modern balance sheets.