By Staff Reporter
ZIMBABWE Platinum Mines (Zimplats) has lost out in a court application it was seeking to be allowed to pay taxes in both the USD and local currencies after the High Court ruled this was unlawful.
The platinum mining company had claimed this was mainly because its income and expenditure were predominantly in foreign currency and only marginally in local currency.
Its suggestion followed Zimbabwe Revenue Authority (Zimra)’s announcement that income tax returns would be done in local currency but it could accept returns completed in foreign currency if taxpayers allocate tax returns based on the contribution of the respective currencies to the total turnover or any other method.
The announcement was published under Notices No. 36 and 57 of 2021.
In addition the notice also said Zimra could approve any other method that was suggested by the taxpayer.
The notice further allowed taxpayers with gross income, mainly in foreign currency, but with allowable deductions in both currencies, to submit a single income tax return in foreign currency.
Following this, Zimplats submitted its alternative method for the year ending 30 June 2021, arguing its revenue and taxes would be split into foreign and local currency while the taxable and taxes would be computed by currency.
Zimra had rejected the suggestion, claiming that it was inappropriate for Zimplats to deduct all expenditure from foreign currency income since that expenditure was being incurred for earning both types of incomes.
The revenue authority had asked that its payable taxes be computed by currency, demanding deductible expenses, capital expenses and non deductible expenses be paid using the ratio 60 -40 for USD and ZWD respectively.
This had prompted Zimplats to approach the court seeking a declaratur against Zimra for rejecting their suggestion.
High Court judge Justice Joseph Mafusire dismissed the application, noting that Zimplats’ suggestion was not lawful.
“The applicant’s proposed method of accepting the RBZ notional ration of 60:40 in regards to income only, and using the currency of the invoice for expenditure, has no legal backing.
“All that can be said is that the applicant’s income and expenditure are predominantly in USD and only marginally in ZWD. Section 4A(10) of the Finance Act caters for such uncertainties. If, as the applicant argues, apportionment should be confined to revenue only, then s15(2)(a) closes the gap in regards to expenditure.
“The main dispute can only be decided in favour of the respondents. It is for above reasons that the declaratur sought by the applicant cannot be granted,” ruled the judge.