Zimplats faces revised tax bill of $34m
28 September 2012
Posted by: SAIT Technical
By Tawanda Karombo (Business Day)
IMPALA Platinum's Zimbabwe unit, Zimplats, has advised its shareholders that the Zimbabwe Revenue Authority is in the process of issuing a $33.8m revised income tax assessment on the platinum miner.
The revised tax assessment covers the period between 2007 and this year.
"The principal tax per the assessments amounts to $33.8m and the company may be liable for additional interest and penalties,” the company's chief financial officer, Patrick Maseva-Shayawabaya, said yesterday.
Zimplats produced 182,100oz of platinum in this past financial year to end-June.
Zimplats said in a note to shareholders that "the revised assessments will disallow, in the main, the claiming of capital expenditure in full in the year incurred as provided for in the written undertakings issued by the Zimbabwean government 2001”.
Despite conceding that it is liable to pay the principal amount of tax, Zimplats has lodged an objection to the payment of penalties and interest, although the two parties are locked in discussions, including payment terms, over this.
"The government is hard pressed for cash and the tax authority will likely want to capitalise on any situation. But mining companies already face high mining fees and are struggling against high costs, so this further worsens their situation,” said economic analyst Johannes Kwangwari.
During the fourth quarter, to the end of June, Zimplats contributed about $23m in direct taxes to the government.
Finance Minister Tendai Biti has gazetted amendments to Zimbabwe's Revenue Authority legislation, which empowers the tax authority to use previously unlawful means — such as entering mining sites and examining operations and accounting books — to ensure that royalties and fees payable to the authority have been made.
A policy research analyst at a local finance and advisory company told Business Day that the new powers given to the tax authority could come as a blow to investors in the resources sector.