By Patience Gondo
THE Zimbabwe Constitutional Court has dismissed an application by Delta Beverages (Private) Limited for direct access in its tax dispute with the Zimbabwe Revenue Authority (ZIMRA).
The dispute arises from a tax audit conducted by ZIMRA covering the period January 2019 to October 2021.
In November 2021 ZIMRA notified Delta of its intention to review the company’s VAT and income tax returns. Following the audit ZIMRA issued additional VAT and income tax assessments in June 2022 including 20 percent penalties with part of the tax assessed in foreign currency.
ZIMRA maintained that tax arising from income earned in foreign currency must be paid in foreign currency.
Delta objected to the assessments, arguing that under Zimbabwe’s currency laws, its tax obligations were lawfully payable in Zimbabwe dollars. The objections were dismissed by the Commissioner General of ZIMRA.
Delta challenged the assessments in the High Court. In judgment HH 557-23, the High Court ruled in favour of ZIMRA and upheld the additional assessments.
The court held that income earned in foreign currency is taxable in that currency in terms of the Income Tax Act athe VAT Act and section 4A of the Finance Act.
Delta appealed to the Supreme Court which dismissed the appeal and confirmed the High Court ruling.
The company then applied for direct access to the Constitutional Court, alleging that the High Court and Supreme Court failed to determine six material issues, thereby violating its rights under sections 56 and 69 of the Constitution.
Delta said that the assessments exposed it to a potential tax liability of about US$50 million.
The Constitutional Court dismissed the application ruling that the matter was a tax dispute and not a constitutional issue. The court held that direct access is an extraordinary remedy and that Delta had alternative remedies available.
The court confirmed that the Supreme Court judgment is final and binding.
The Constitutional Court said matters arising from ZIMRA’s rejection of Delta’s objections remain pending before the Fiscal Appeals Court and the Special Court for Income Tax Appeals.