By Wezzie Gausi:
The Malawi Building and Civil Engineering Contractors and Allied Trade Association (Mabcata) has petitioned Parliament over the recent increase in withholding tax by the government.
Recently, the Ministry of Finance announced that it has adjusted the withholding tax from four to 10 percent.
Presenting the petition to the Parliamentary Committee on Transport and Public Infrastructure on Tuesday in Lilongwe, Mabcata Vice Chairperson Kondwani Kadango said the association has written the committee, rating the rate as oppressive and retrogressive.
He said while they appreciate the efforts taken by the ministry to widen the tax base that would foster development, they also find the proposed approach of deducting 10 percent withholding tax on gross payments for contractors and subcontractors to be insensitive, inconsiderate and punitive.
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“The adjusted withholding tax rate to 10 percent is high and then deduction based on gross values is wrong because it assumes the whole contract sum is a profit while in reality the contract figures are inclusive of labour costs, materials costs, transport costs and all associated supervision costs,” Kadango said.
Member of Parliament for Salima North West Constituency Enock Phale acknowledged receipt of the petition.
“We have heard the concerns of the association and, as per law, we will be sitting down to discuss the issues. And after a thorough look at the petition, a report will be drafted that will be presented to Parliament as per requirement in the law,” Phale said.
Meanwhile, Mabcata has asked the committee to consider taking appropriate steps to rectify the anomaly while considering a reduction of the proposed withholding tax rate as businesses are being suffocated.
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Mabcata also said their industry has no withholding tax exemption certificate.
