THE Supreme Court has dismissed an application by Delta Corporation Limited challenging a High Court ruling directing the beverages manufacturer to pay its taxes in foreign currency.
The Zimbabwe Revenue Authority (Zimra) billed Delta in United States dollars citing their revenues and sales in forex.
Delta cited Zimra in its application.
The matter was heard by the Supreme Court bench consisting of Deputy Chief Justice Elizabeth Gwaunza, Justices Tendai Uchena and Samuel Kudya.
According to the court documents, Delta submitted its value-added tax (VAT) returns from March 2019 to October 2021 as well as income tax returns for 2019 and 2020 and paid all its taxes in full in local currency.
On November 17, 2021, Zimra gave Delta notice of its intention to carry out a tax review of its tax liabilities covering the period January 1, 2019 to October 31, 2021.
The tax collector raised issues with Delta on whether its VAT returns were paid in the currency of trade.
In response, Delta wrote a letter to Zimra dated 24 November 2021 saying section 23 of the Finance Act made the local currency the sole legal tender.
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On June 11, 2022, Zimra informed the company about discrepancies which were found in its self-assessments after a tax audit of Delta’s returns.
Zimra found that Delta failed and/or neglected to pay income tax and VAT in foreign currency from the income generated.
Zimra then re-computed Delta’s tax liability and issued it with amended tax returns, which required it to pay its taxes in foreign currency in accordance with sales and revenues in forex.
Aggrieved by Zimra’s re-assessments, Delta approached the High Court arguing that it was unlawful for Zimra to reject payment in local currency.
Zimra opposed the application, arguing that payment of taxes in foreign currency on income received in forex is exempt from being paid in local currency as provided under section 23 of the Finance Act.
The High Court ruled in favour of Zimra.
Aggrieved by the High Court ruling, Delta approached the Supreme Court.
In dismissing the appeal, Supreme Court judges upheld the High Court decision that Delta received payments in foreign currency and should pay tax in forex.
The judges dismissed the appeal with costs.
