Zimplats tax hearing date set, Q4 profits up 39pc

HARARE -  Zimplats appeal hearing against a $26,9 million additional profits tax (APT) bill imposed by the Zimbabwe Revenue Authority has been set for September 15, 2014.

The case, which has been dragging for years, will be heard by the Special Court for Income Tax Appeals.

A few years back, the Zimbabwean tax collector issued Zimplats — Zimbabwe’s largest platinum producer — an amended tax bill that included APT, but the miner objected.

The group argued that it was not liable to pay APT in terms of an agreement entered into with the Zimbabwean government.

Prior to commencing operations in 2001, Zimbabwe gave a written undertaking that Zimplats would not be liable for this tax, but no legislative changes were effected to give this undertaking legal effect.

Consequently, Zimra pounced on the platinum group metals producer, saying its agreement with the government had no effect at law.

APT, or windfall profits tax, is a higher tax rate on profits that ensues from a sudden windfall gain to a particular company or industry.

Zimra previously demanded a penalty of $4 million for Zimplats’ default in the payment of the tax, although this is understood to have been subsequently waived.

But since February 2009, it has instituted recovery of the APT liability by withholding monthly Value Added Tax refunds due to Zimplats.

In a related case, Zimplats said its appeal against the levying of a penalty by Zimra on the additional prior years’ income taxes has now been set down for hearing in the Special Court for Income Tax  Appeals on September 24, 2014.

Early this year, Zimra granted Zimplats a reprieve to reduce the penalty from eight percent to five percent, but dismissed objection against the payment of interest. However, Zimplats lodged an appeal with the income tax appeals court against Zimra’s determination on the penalty, while an application was made to the High Court to review the determination on the interest.

Meanwhile, Zimplats — 87 percent owned by South African Impala Platinum Holdings — has reported a 39 percent surge in second quarter profits on the back of improved sales.

The platinum producer said March to June operating profit rose to $50 million from $36 million recorded in the previous quarter.

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