Zimplats, govt yet to agree on indigenisation

HARARE - Zimbabwe's largest platinum producer Zimplats says it has not yet reached a conclusive agreement with government over its indigenisation compliance plan.

This comes as the miner — 87 percent owned by South Africa-based Impala Platinum Holdings — last year refused to foot a $17 million consultancy bill levied by Brainworks Capital (Brainworks) who were contracted by the National Indigenisation and Economic Empowerment Board (Nieeb) to structure and facilitate the empowerment deal.

“The Indigenisation Implementation Plan (IIP) agreed with the government of Zimbabwe in January 2013 was not concluded following indications that it no longer met with government expectations,” said the miner in its 2014 annual report.

However, Zimplats noted that discussions with the government over their plan were still on-going.

In a letter dated February 22 last year, Zimplats chief executive Alex Mhembere said it was extremely absurd for the Australian-listed company and his South African shareholders to foot the Brainworks bill when it had been contracted by government, in what was dubbed the country’s greatest empowerment transaction.

Zimplats was obliged to comply with the indigenisation plan under the $971 million transaction, facilitated through vendor financing at an interest rate of 10 percent per year.

Zimbabwe’s indigenisation policy compels foreign-owned companies to sell or cede 51 percent of their shares to black citizens.

Meanwhile, a Special Court for Income Tax Appeals has reserved judgment on 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 had 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.

 

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