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Government sleeps on tax deals

About one-and-a-half years after the government disclosed that it was reviewing archaic double taxation treaties with countries like Britain and South Africa, The Daily Times has learnt that nothing is happening on the matter.

Recently, an anti-poverty organisation, Action Aid International, which has been pushing for review of the treaties, described the deals as grossly unfair and part of the reasons for Malawi’s underdevelopment.

For over half a century, some British government enterprises in Malawi have not been paying tax following the pact ,which was signed on November 25 1955 by one G.McC. Rennie on behalf of Malawi and one R.A Butte on behalf of the UK government.

At that time, Malawi was part of the Federation of Nyasaland and Rhodesia and Rennie was British governor in the federation.

The treaty implies that both governments should be benefitting from the pact, but Malawi finds itself at the receiving end because it does not have any notable investments in the UK which ironically, has huge investments in the country.

British High Commissioner to Malawi, Holly Tett, said she was aware of the review of a tax treaty between Malawi and her country. The process initiated during the tour of duty of her predecessor, Michael Nevin.

She, indicated that, while there are documents in her office, nothing is happening on the ground.

“I am aware of the process and there are documents in my office on the same. What I can say is that, so far, nothing is happening, but I know that such a process is important because the United Kingdom is committed to assisting Malawi in its development programmes,” Tett said.

She was responding to a question on what her country is doing to ensure the double taxation treaty between the two countries is reviewed as soon as possible so that both countries start to benefit.

A source at Capital Hill confided in The Daily Times that, despite some stakeholders imploring the government to urgently work on the review, there seems to be little commitment from the Ministry of Finance and the Ministry of Justice.

And, according to Khonje, when multinational companies do not pay their fair share of tax, it means that small local businesses and individuals are left footing the bill, which also pushes the burden further onto the poor.

“We continue to call upon the Government of Malawi to cancel tax treaties with tax havens and refuse to sign new treaties with tax havens,” she said.

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