Dust is refusing to settle on the 16.5 percent Value Added Tax (Vat) introduced on non-banking services, with commercial banks passing on the fee to consumers despite the government speaking strongly against the option.
But the commercial banks through their umbrella body, the Bankers Association of Malawi (Bam), say they were only making a business decision, bending to the provisions of the law.
It has transpired that the commercial banks have been charging 16.5 percent more for some services since November 1 2021.
Commercial banks such as FDH, NBS and MyBucks Banking Corporation have already published statements announcing revised tariffs.
For example, NBS customers will now pay K4,310.50 to transfer money between two accounts of the same bank from the initial K3,700. MyBucks customers will pay K6,408 per page for a bank statement from K5,500.
This is despite explanations from the Treasury and revenue collection body, the Malawi Revenue Authority, that banks should not charge customers further as the tax was already imbedded in their initial charge.
Minister of Finance Felix Mlusu reiterated the stance on Tuesday on the side-lines of a visit to Shire Valley Irrigation Project sites in Chikwawa that customers should report such banks to the Reserve Bank of Malawi.
“A tax was passed, this tax was for nine banking services that the banks offer but have nothing to do with the customer. That is what they collect as their (banks’) income; they were not paying tax on this income and we, as government, would like that VAT should apply but the banks want to pass on this tax to the customers but that is not the intention.
“I think there is a misunderstanding between the law and the bankers. This tax is not to be passed on to the customers if any banker passes on to the customer, those banks should be referred to the authority the Reserve Bank of Malawi and it will deal with the specific banks,” Mlusu said.
However, in an interview Tuesday, Bam Chief Executive Officer Lyness Nkungula said the banks were only making a business decision.
“It is a business decision that they can make but, also, we have to understand what the law says about the VAT. It is a consumer law but what I can say is that the banks will comply to the law,” Nkungula said.