Tax row ends

Government on the original formula have not been legalised.
The revised assessments will set aside the claims of the capital expenditure in full in the year incurred as provided for in the written undertakings issued by the

Government in 2001 when Zimplats started operations.
Zimra has argued that the re-assessments will be issued on the grounds that the legislation required to give legal effect to the undertakings has not been promulgated. Zimra, the Government’s revenue collecting arm, and Zimplats have agreed the extent of the liability could be US$33,8 million and the miner may be liable for penalties and interests.

“At issue, is the claiming of capital expenditure in full in the year incurred provided for in the written undertakings that were issued by the Government in 2001, rather than over four years as prescribed in the tax legislation,” Zimplats chief executive Mr Alex Mhembere said.
“The company has applied these calculations in good faith over the period in accordance with the original undertaking, but accepts that, in the absence of the

Government promulgating the relevant legislation as it undertook to do, Zimplats is liable to pay the additional principal tax.
“Zimplats has conducted its tax affairs in good faith, relying on an undertaking received from the Zimbabwean Government in 2001 which informed how tax was calculated.

“I would like to reiterate that Zimplats conducts itself at all times as a responsible corporate citizen and will comply with legislation, and pay all taxes due.”
In a note to shareholders published on the Australian Stock Exchange yesterday, Zimplats said while the company had agreed to pay  the tax, it has lodged an objection to the payments of penalties and interest. Discussions are in progress.

“The company has conceded that, given the Government did not give legal effect to the written undertakings as envisaged, it is liable to pay the principal amount of tax.

“However, it has lodged an objection to the payment of penalties and interest. Discussions with Zimra in this regard are ongoing, including discussions on payment terms.”
In an interview yesterday, Mr Mhembere said Zimplats had engaged an independent firm of tax experts to audit the company’s tax compliance.

Zimplats has invested US$955 million since it started operations in 2001, making it one of the biggest foreign investors in the history of the country.
Production has risen more than 10-fold from an annual output of 20 000 tonnes to 187 000 tonnes.
The company employs about 5 500 people. An expansion programme to develop a mine with an estimated output of 270 000 tonnes is nearing completion.