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Daniel Nemukuyu Senior Court Reporter
Mayor Logistics (Private) Limited has taken the Zimbabwe Revenue Authority to court challenging the authority’s taxing system, which it said is wrong and inaccurate.
The company, which is involved in the transport and fuel business, argued that Zimra used the wrong principles in calculating its arrears Valued Added Tax and income tax at US$3 235 814,68.
Mayor Logistics is contesting the figure at the Fiscal Appeal Court, but on Thursday the firm filed an urgent chamber application at the Constitutional Court to stop collection of the money pending determination of the main challenge.
It is the company’s argument that Zimra failed to appreciate its business relationship with Sakunda Energy.
Mayor Logistics purchased fuel from Sakunda and paid for it in kind through providing transportation services.
In the founding affidavit by Mayor Logistics’ accountant Mr Farai Mhangwa, it is argued that Zimra was wrong in interpreting the relationship as a taxable transaction.
“The respondent (Zimra) contends that payment for fuel in kind has led to the under-declaration of sales by the applicant and that such payment in kind should be construed as a taxable supply as contemplated in the Act,” reads the affidavit.
“The applicant disagrees with this interpretation and argues firstly, that payment for fuel in kind is not a ‘supply’.
“Secondly, the applicant has not under-declared its sales as alleged by the respondent. Applicant maintains that the triggering factor for VAT is the supply of goods and services and not the purchase of fuel.”
Mr Mhangwa argued that Zimra should make a clear distinction between the two transactional relationships between Mayor Logistics and Sakunda, which involves the provision of transport services and the purchase of fuel.
Zimra has since hinted on its intention to collect the outstanding tax anytime.
Online Reporter