Zimplats loses $30m tax challenge

Published: 07 June 2015

Impala Platinum (Implats)' Zimbabwean unit Zimplats has lost its High Court challenge of a $29,6 million additional profits tax (ATP) bill imposed by the country's revenue collector.

Alex Mhembere, Zimplats chief executive, on Thursday said "the effect of the judgment is that (the group) will have an additional liability for APT for the period July 1, 2004 to December 31, 2014".

He said the miner - 87 percent owned by Implats - is currently engaging the Zimbabwe Revenue Authority (Zimra) over a payment plan.

Zimplats had appealed to the High Court primarily disputing the calculation of the ATP and a penalty on income tax, but the appeal was dismissed.

Mhembere said the court "ruled that the deduction of an assessed loss carried forward from a previous year of assessment is not an allowable deduction for the purposes of calculating APT".

However, in a separate case, the High Court has ruled in favour of Zimplats against Zimra over a dispute on mining royalties.

As such, Mhembere said the miner - Zimbabwe's largest platinum producer - was in discussion with the tax collector to reconcile the two judgements.

"The operating subsidiary is engaging Zimra on the financial impact of the judgments and the modalities of giving effect to them," he said.

Prior to Zimplats commencing operations in 2001, the government undertook that the miner would not be liable to APT, but no legislative changes were effected to give legal effect.

As a result, Zimra pounced on the platinum miner, saying its agreement with government had no effect at law.

The tax collector previously demanded a penalty of $4 million for Zimplats' default in the payment of the tax, although this is understood to have been subsequently waived.

Since February 2009, Zimra had been instituting recovery of the APT liability by withholding monthly Value Added Tax refunds due to Zimplats.

The latest development comes at a time when the Australia Stock Exchange-listed miner's operations are being weighed down by the collapse of its Bimha Mine.

Mhembere recently said the mine collapse resulted in the damage and inaccessibility of certain underground infrastructure and equipment with a net carrying amount of $22,9 million - which has been written-off during the six months to December 2014.

"An insurance claim is in the process of being finalised for associated plant and equipment, and any compensation received will offset the impact of the write-off," he said.

Bimha is located 150km southeast of the capital Harare and is the biggest of the four mines run by Zimplats.

At the time of the collapse in August 2014, mining experts had indicated that the platinum miner was likely to lose as much as $100 million after Zimplats had said the shutdown would hamper production of 70 000 ounces of platinum.
- dailynews

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