• The Group paid ZWL17.5 billion in government taxes
  • This resulted in PAT increasing at a decreasing rate, from increasing by over 100% in FY2021 to a 4% increase in FY2022
  • Income tax expenses doubled to ZWL4 billion
  • Exports declined by 43%

Harare-Manufacturer and distributor of tobacco products, British-American Tobacco Zimbabwe Limited has paid ZWL17.5 billion in taxes to Zimbabwe Revenue Authority during the full year ended 31 December 2022, resulting in a massive dip in profit increase. 

Between the full year 2020 and the full year 2021, after-tax profit for the Group increased by over 1000% to ZWL1 billion from ZWL98 million. Between the full year 2021 and 2022, after-tax profit saw a marginal increase of 4% from ZWL4.8 billion to ZWL4.9 billion. 

This means profit increased at a decreasing rate courtesy of a hawkish taxation regime. Income Tax Expenses almost doubled after soaring to ZWL4 billion from ZWL2.7 billion in FY’2021. 

“BAT Zimbabwe’s contribution to the Zimbabwe Revenue Authority (“ZIMRA”) in the year under review, increased from ZWL 11.0 billion in 2021 to ZWL 17.5 billion for the full year ended 31 December 2022,” said the Group’s secretary Phyliss Chenjera in a statement accompanying the full year financials. 

Against Zimbabwe’s US$27 billion economy, corporates like BAT pays a toxic 24.7% corporate tax and a 14.5% value-added tax. Corporates further pay custom duties and withholding tax while pay-as-you-earn (PAYE) tax remains substantial. The corporate further cede 25% of its foreign earnings to RBZ in return for the impoverished Zimbabwe dollar at an overvalued auction market rate. 

“Key contributors to the Group’s increased tax payments were excise duty, corporate tax and pay as you earn (PAYE), driven by increases in the selling price of our products and profit generated before taxation and rising inflation,” said Chenjera. 

A hawkish taxation stance is milking corporates’ earnings in an environment where hawkish monetary policies are gazetted against a volatile exchange rate, poor FDI stats and high inflationary pressures. 

Due to high currency depreciation rates and volatile exchange rates, the Group’s exchange losses more than doubled to 106%, from a monetary gain of ZWL1.2 billion in 2021 to a monetary loss of ZWL1.6 billion in 2022.

Despite registering a 50% revenue uptick, from ZWL16 billion to ZWL24 billion, the revenue growth did not translate into similar growth in profit before the tax due to the impact of exchange losses.

Meanwhile, the Group further reported dampened volumes of 1 054 million sticks for the year under review, compared to 1 130 million sticks the previous year due to the shortage of RTGS in the market which made it difficult for customers to purchase our products. 

In 2022, BBZ spike the bank policy rate to 200% as it battled to fight down inflation by curtailing speculative borrowing and arbitrage opportunities. However, that curtailed productive borrowing and consumer purchasing power. 

Chenjera further said the Group established that the smart pricing mechanism implemented by the Company resulted in higher pricing when compared to competitor trade prices in United States Dollars.

Separately, export volumes of cut-rag tobacco declined by 43% during the period under review compared to the prior year as a result of decreased export market demand.

The Board proposes the declaration of a final dividend of ZWL 88.35. 

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