23 May 2012

Zambia: Varun Lawyers Hopeful of 'Peaceful' Tax Negotiation

LAWYERS representing Varun Beverages Limited are confident that Government and the company will amicably resolve the matter involving the disputed tax holiday outside court.

Mulenga Mundashi from Mulenga Mundashi and Company said the parties were making progress in the talks outside court.

Varun Beverages Limited, the manufacturer of Pepsi soft drinks, has asked the court to quash Government's decision to revoke the five-year tax holiday granted to the company by the MMD regime in 2009.

Varun had, through its lawyers, applied for an adjournment when the matter came up for inter-parte hearing to enable the parties exhaust settling the matter ex-curia (out of court).

Mr Mundashi, before seeking another adjournment, told Lusaka High Court Judge, Anesi Banda-Bobo on Monday that the parties were hopeful that they would positively resolve the matter ex- curia.

He said that so far, the Government and the aggrieved company had held talks towards finding a solution.

"When we last met, we indicated a possible ex-curia settlement and we confirm that tentative talks have been held and it is hoped that in the next couple of meetings, parties will come up with a position," Mr Mundashi said.

Lawyer from the Attorney General's chambers, Joe Simachele confirmed to the court that Mr Mundashi's statement was the correct position on the matter.

Ms Justice Banda-Bobo adjourned the matter to July 31, this year.

The soft drink making company, which is challenging the decision to revoke its five-year tax holiday, felt that the revocation was in defiance of the rule of natural justice as it was not afforded an opportunity to be heard.

Varun claims it was granted a licence in respect of an investment worth more than US$44 million by the Zambia Development Agency in 2008.

It stated that some time in 2009, it applied for tax incentives in form of exemption from value added tax and excise duty, which was granted by the then minister of Finance, Situmbeko Musokotwane.

The company is also demanding damages and costs resulting from the decision.

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