WINES and spirits beverage maker, African Distillers Limited (Afdis) has been hit with additional taxes of US$1,84 million by the taxman concerning new income tax assessments, including penalties and interest.
According to Afdis, 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.
This period saw the Zimdollar (ZWL) made the only currency in use from June 2019 to March 2020, when the multicurrency regime was returned to be used alongside the ZWL.
The Zimbabwe Revenue Authority (Zimra) tax bill is akin to similar tax assessments made against Afdis’ parent company, Delta Corporation Limited (Delta).
As of January, Delta had to pay
US$73 million to Zimra following these tax assessments, which were disputed and then lost in the courts.
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“As previously reported as at September 30, 2024, 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,” Afdis said in a statement attached to its financial report for the year ended March 31, 2025.
“The Zimbabwe Revenue Authority issued income tax assessments, including penalties and interest against the company amounting to US$1 841 221 [ZiG49 225 939] [2024: ZiG24 966 957].
“Zimra contends that these amounts should have been paid exclusively in foreign currency and the amounts originally paid to be refunded in the debased nominal values.”
Afdis said while the recent court judgments on similar cases (Delta vs Zimra) support Zimra’s position on the matter, there were significant legal and factual issues still to be addressed.
“Zimra is empowered to collect any taxes it deems due under the ‘pay now, argue later’ principle. The company had accumulated payments amounting to US$1 130 221 [(ZiG30 208 434) (2024: ZiG5 964 027)] as of March 31, 2025 in line with this principle and as per agreed payment plans,” Afdis said.
“We believe any revisions to the payment plan will be rational, taking into account the financial health of the business and the fact that the principal amounts were fully paid in legal tender at the relevant periods, based on the best available interpretation of the legislation.”
The firm noted that there are still areas that require clarity and adjustment in the assessments raised.
“Management continues to engage with Zimra while appealing certain areas of assessments and the judgments, with guidance from tax experts and legal counsel,” Afdis said.
“This assessment could have a material impact on the company’s operations if it materialise as per the extant assessments.”
NewsDay Business understands that the outcome of these engagements will determine the accounting treatment and recognition of the assessment and payments made to date.
“No provision for any interest and penalty liability arising from the claims by Zimra against the company has been made in these financial statements,” Afdis said.
“The company has been advised by its legal advisers that it is possible, but not probable, that an outflow of resources embodying economic benefits will be required to settle the interest and penalty. The total interest and penalty amount to US$588 247.”
