Zimplats gets $9,6m tax relief

HARARE - PGMs producer Zimplats Holdings (Zimplats) has been granted a $9,6million tax reversal judgment in a customs duty case against the Zimbabwe Revenue Authority 

The country’s largest platinum miner had filed a suit with the High Court of Zimbabwe challenging the validity of the tax bill, though it had settled the liability — on a without prejudice basis — pending determination of the matter.

“The net impact of the judgment is that Zimra is required to repay Zimplats the amount of the fines imposed by the tax authority amounting to $9, 6 million,” said Alex Mhembere, the chief executive, in a statement.

“Zimplats will be reversing the amount of these fines which had previously been charged to the profit and loss account,” he said.

Mhembere said following the hearing of the case in the High Court in April this year, judgment was reserved and subsequently a written judgment was issued on September 12, 2018.

“The presiding judge ruled that the operating subsidiary (Zimbabwe Platinum Mines) was not entitled to be granted the customs duty rebates that it had been granted between the years 2009 and 2013 and at the same time also ruled that Zimra was not entitled to impose the fines that it had levied on the operating subsidiary,” Mhembere said.

The dispute was over whether the subsidiary was entitled to claim and to be granted certain customs duty rebates.

It was also about whether Zimra was entitled to impose fines on the operating subsidiary in respect to these customs duty rebates.

Meanwhile, Zimplats says its capital spend for 2018 surged 113,7 percent to $135,3 million as the group worked on mine development and replacement.

In 2017 the group spent $63,3 million on capital projects.

Mhembere last week said the miner had spent a total of $131 million on stay in business projects during the year, 121 percent higher than the $59,3 million spent in the prior year.

In the 2018 financial year, Zimplats revenue was up 14 percent from $512,5 million in to $582,5 million despite a two percent decrease in 4E sales volumes from 555 892 ounces to 542 085 ounces.

“This was due to the increase in average prices of palladium, nickel, rhodium and copper which resulted in a 17 percent increase in gross revenue per platinum ounce from $1 868 to $2 184,” the Zimplats boss said.

The platinum miner was awarded a 2,5 percent export incentive on export proceeds received in Zimbabwe. As a result, income of $13,6 million was recognised in the income statement.

Resultantly, the deferred tax charge for the current year was significantly higher than for prior year because of the change of the operating subsidiary’s status from being a special mining lease (SML) holder to a mining lease (ML) holder.

Consequently, profit for the year decreased from $45,5 million in FY2017 to $2,6 million. – The Financial Gazette


 

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