Listed platinum miner Zimplats has voiced its frustration over Zimbabwe’s volatile and complex fiscal framework, which it says is prone to conflicting interpretations and presents significant challenges for businesses.
Disclosures by Zimplats, which is listed on the Australian Stock Exchange, were the latest to highlight the difficulties stemming from shifting tax policies and the uncertainty they create for companies operating in Zimbabwe.
These complications arise as authorities frequently switch between domestic currencies due to high inflationary pressures and low confidence in the local unit.
Zimplats joins other major firms like Delta Corporation and National Foods Limited in raising concerns over the country’s tax regime.
“The group has historically filed, and continues to file, all required income tax returns and to pay the taxes reasonably determined to be due,” Zimplats said in its preliminary final report for the year ended June 30, 2024. “The fiscal legislation in Zimbabwe is volatile, highly complex and subject to interpretation.
“From time to time, the group is subject to a review of its historic income tax returns and in connection with such reviews, disputes can arise with the Zimbabwe Revenue Authority (Zimra) over the interpretation and/or application of certain legislation.”
The mining giant said significant judgment was required in determining the provision for income taxes due to the complexity and differences of interpretation of fiscal legislation, and application which may require determination through the courts.
“There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business,” it said.
- Currency crisis hits capital markets
- We are climbing out of hard lockdowns, says Delta boss
- Currency crisis hits capital markets
- We are climbing out of hard lockdowns, says Delta boss
Keep Reading
The group said it recognised liabilities for anticipated tax audit issues and uncertain tax positions based on estimates of whether additional taxes will be due.
The assessment is based on objective, unbiased interpretation of the fiscal legislation, informed by specialist independent tax and legal advice.
Where, Zimra, as the tax authority makes an assessment that differs from that determined and initially recorded by the company, such difference in computation will impact the income tax expenses and liabilities in the period in which such determination is made.
Zimplats has taken legal action, filing cases in the Special Court for Income Tax Appeals and the Supreme Court of Zimbabwe over several historical tax disputes.
While the Supreme Court recently ruled in favour of Zimra on one matter, Zimplats had already settled the disputed liabilities on a without-prejudice basis, ensuring the ruling had no financial impact on the group.
Zimbabwe’s evolving currency landscape has further complicated the tax environment.
The reintroduction of the Zimbabwe dollar in 2019, followed by Statutory Instrument 185 of 2020, which allowed the use of foreign currency for domestic transactions, and the introduction of the Zimbabwe Gold currency in 2023, have created uncertainties in tax treatment across the economy.
The National Foods Limited also recently pointed out that a lack of clear statutory guidance and transitional measures from tax authorities has worsened the situation.
The wording of existing tax legislation has given rise to varying interpretations of tax laws within the country.
The Association of Chinese New Energy Miners, during a recent Chamber of Mines conference, called for a stable and transparent tax framework, emphasising that clarity in taxation policies is critical for fostering confidence and encouraging long-term investments that promote value addition.
The association said, while ensuring that the nation benefitted fairly from its resources, “we must also create a conducive environment that encourages investment and innovation”.
It also said clarity and stability in taxation policies will instil confidence and encourage long-term investments in value-addition initiatives.
