Advertisement
Business

Banks backtrack on 16.5% services VAT

Advertisement
Lynes Nkungula

Commercial banks have been seen to draw back in the mix up with the government on the controversial 16.5 Value Added Tax (VAT) on non-banking services, with most reviewing their charges to old rates.

On November 1, banks revised their charges on non-banking services reflecting the tax, saying it was in accordance with the amendment to the VAT Act during the last meeting of Parliament.

For example MyBucks Banking Corporation announced that from November 1, current account bank cheque issuance will be attracting fees of K34,950 from K30,000, bank statement per page will attract K6,408 from K5,500 while a draft will be sourced at K23,300 from K20,000.

Advertisement

However, three weeks later, the banks have published fresh statements indicating a downward review of the service fees where, in some cases, the charges are below the initial charge.

For MyBucks Banking Corporation, current account bank cheque issuance will now attract K27,000, bank statement per page will attract K5,000 while a draft will be sourced at K15,000.

Earlier, NBS Bank customers were advised that they would be paying K5,825 for a savings account statement after factoring in the VAT but its recent statement indicates that the service will only attract K2,500 before VAT.

Advertisement

National Bank of Malawi and Ecobank, which did not revise their fees at the beginning of the month, have also recently issued statements highlighting reduced charges on certain fees.

For example, Ecobank has reduced the charge for ATM cash withdraw to K250 from K300 and same-year statement for a savings account to K2,790 before VAT from K6,000. National Bank has also reduced statement within a month per page to K1,500 from K4,370, among others.

In a WhatsApp response to a questionnaire, Bankers Association of Malawi Chief Executive Officer Lyness Nkungula said banks, as independent entities, needed to make business decisions about the charges, fees and commissions to the customers.

“All the tariffs before November 1 2021 did not include VAT; so, in this case whether banks are charging a reduced price or have maintained their prices, VAT has to be collected and duly remitted to the Malawi Revenue Authority.

“It would be difficult to estimate the exact amount banks are remitting to MRA as VAT as this would depend on the traffic of transactions on those specific non-financial services,” Nkungula said.

At the height of the tariff increases by the banks, Minister of Finance Felix Mlusu told customers to report banks that were increasing charges to the Reserve Bank of Malawi.

In a separate interview, Managing Consultant for Intellect-Link Consultants Pharrison Chiphinga Mwale said the development shows that the banks have received pressure from both the government and consumers, hence the move.

“The banks are reluctant to go a long way; that is the reason they have made this adjustment in order to sail between the lines,” Mwale said.

Advertisement
Tags
Show More
Advertisement

Related Articles

Back to top button
Close
Close

Adblock Detected

Please consider supporting us by disabling your ad blocker