Banks lament 40 percent tax
A 40 percent corporate tax on profit above K10 billion thresholds for commercial banks, which Minister of Finance Sosten Gwengwe announced on Tuesday, has left players in the industry shivering, saying it would cripple their footing.
The banks, through their umbrella body, Bankers Association of Malawi (Bam), have since rated the tax measure as punitive.
In a brief emailed response Thursday, Bam Chief Executive Officer Lyness Nkungula said the industry fears that the option could have devastating repercussions.
“I feel like our members are being punished for doing something positive in the economy. Not all profits are consumed as some are ploughed back for business growth. We understand this is a temporary measure but for how long will this be? Such issues can destroy business.
“We need a healthy banking sector that could help in the recovery of our country. Banks should not be discriminated against. Let us be fair as other business players in various sectors are also making profits,” Nkungula said.
She said while it is unfortunate that Cyclone Freddy has devastated the economy, each business player should be accorded the same treatment during such tough times.
“Ours is a concern over the announcement that our members will be charged 40 percent over annual profit that is over 10 billion,” she said.
In a statement when winding up debate on the proposed K37 trillion 2023-24 national budget in Parliament on Tuesday, Gwengwe said the extra revenue solicited will be used for recovery of the economy in the aftermath of Cyclone Freddy.
“This is a temporary measure because of the circumstances we have found ourselves in. But we needed to bolster our revenues,” Gwengwe said.
Commercial banks made a combined K236.7 billion profit in the year ended December 31 2022, up from K137 billion in the corresponding period of 2021, according to figures from the Reserve Bank of Malawi.
As at December 2022, the banking sector’s total assets grew by 14.8 percent (K467.7 billion) to K3.6 trillion from its June 2022 position.
