Zimplats tax wrangle: Court reserves judgement

HARARE - The Special Court for Income Tax Appeals has reserved judgement on Zimbabwe Platinum Holdings (Zimplats’) tax cases.

The miner – 87 percent-owned by South Africa-based Impala Platinum Holdings – is challenging the Zimbabwe Revenue Authority (Zimra) on an imposed additional profits tax (APT) bill and a penalty on income tax.

It said the Court heard the two cases on September 15 and 24, 2014 respectively, but “the Judge reserved judgment after hearing arguments from both parties”

Zimplats – Zimbabwe’s largest platinum producer – is appealing against a $26, 9 million APT liability charged by Zimra.

The case, which has been dragging for years, arose after the tax collector imposed an amended APT bill on Zimplats, which objected on the basis that it was not liable to the tax in terms of an agreement entered into with the Zimbabwean government.

Prior to Zimplats commencing operations in 2001, the government undertook that the miner would not be liable to APT, but no legislative changes were effected to give legal effect.

As a result, Zimra pounced on the platinum miner, saying its agreement with government had no effect at law.

The tax collector 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.

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

In a related case, Zimplats is also appealing against the levying of a penalty by Zimra on the additional prior years’ income taxes.

Early this year, Zimra granted Zimplats a reprieve to reduce the penalty from eight percent to five percent, but the objection against the payment of interest rejected.

However, Zimplats lodged an appeal with the Special Court for Income Tax Appeals against the Commissioner-General’s determination on the penalty, while an application was made to the High Court to review the Commissioner-General’s determination on the interest.

Meanwhile, the Australia Stock Exchange-listed miner’s revenue decreased by 20 percent in the quarter to September 2014 to $133 million from $167 million in the previous quarter due to a 17 percent decrease in 4E sales volumes and a four percent decrease in gross revenue received per 4E ounce.

“Operating costs were 10 percent lower than the previous quarter due to lower production and sales volumes.

“Consequently, operating profit before royalties decreased by 37 percent from the previous quarter to $38,5 million. Royalties decreased by 21 percent from the previous quarter due to the decrease in revenue. As a result operating profit after royalties was 41 percent lower than the previous quarter,” said Zimplats.

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