Taxation expert Emmanuel Kaluluma has lauded the government for tax measures proposed in the 2024-25 national budget, saying they will promote local manufacturing and the tourism sectors.
Minister of Finance Simplex Chithyola Banda announced several tax measures, beginning with removal of import duty and import excise tax on electric motorcycles.
However, he indicated that the standard rate of Value Added Tax (VAT) will be applicable on both the electric motor vehicles and the electric motorcycles in line with good practice in VAT administration.
Furthermore, Chithyola Banda, announced waivers on import duty and import excise tax on building materials, furniture and fittings specifically for the construction of hostels for students in tertiary institutions.
He also mentioned an increase in import duty on finished iron sheets from 15 percent to 25 percent, increase in import duty for sacks from 20 percent to 25 percent and introduction of a surcharge of 10 percent on sacks for cement packaging.
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On Pay As You Earn (PAYE), Chithyola Banda announced the increase in tax-free band from K100,000 to K150,000, with the rest of the tax structure as follows: next K350,000 will be taxed at 25 percent; next K2,050,000 will be taxed at 30 percent and excess of excess of K2,550,000 will be taxed at 35 percent.
In an interview, Kaluluma who is also Senior Tax Consultant at EK Tax Consultants said the 2024-25 budget is a positive financial plan, although there is need to stay with clear objectives of taxation, one of which is taking resources from the haves to the have-nots.
He said the zero-tax rate should not continue to apply to the haves.
“We are denying the resources that are to go to the deserving poor. As of now the poverty line has increased to K150,000 per month. What the government is saying is that whether you are employed or in business if you make K150,000 per month or K1,800,000 per annum that Malawi is poor and should not pay income tax.
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“But this represents the majority who will not be making contributions towards the cost which government is going to incur towards provision of goods and services to its people. This category of us has dependents of on average 5 members of the family who are under their care, it is huge and a big burden. This will bring pressure on government resources,” Kaluluma said.
He added that the customs tax measures employed are a way in which the government wants to encourage tourism and to save jobs and foreign exchange through increased manufacturing of iron sheets.
In a separate interview, Secretary to the Treasury Betchani Tcheleni said the tax measures reflects the government’s intent to spur local production.
