By Wezzie Gausi:
The Ministry of Finance and Economic Affairs has said with the current economic status, the government is not ready to reduce withholding tax for the construction sector.
This comes after the Malawi Building and Civil Engineering Contractors and Allied Trade Association (Mabcata) petitioned the National Assembly over its displeasure with the increase of withholding tax.
Mabcata wants the withholding tax reduced from ten percent to four percent.
In an interview, Secretary for the Treasury Betchani Tchereni said the received some proposals to have withholding tax on construction sector to be reduced.
But he said looking at the revenue challenges the government is facing to meet budgetary obligations, it is imperative that some of these noble propositions for incentives be waived.
“We therefore are yet to come to the level where we can confidently reduce the withholding tax on the construction sector in general.
“As it stands we have a lot that we need to do in order to bridge the budgetary gap that is there. So some of the things can wait for now,” Tchereni said.
Parliamentary Committee on Transport and Public Infrastructure Chairperson Enoch Phale said it is the committee’s desire to have the withholding reduced to four percent.
He said as it stands the people in the construction sector are having challenges with the current tax.
“As a committee it is our plea to the government to have the withholding tax reduced. With the current economic status, business owners are finding it a challenge with this huge tax obligation,” Phale said.
Minister of Transport and Public Works Jacob Hara said his ministry had some negotiations with the Malawi Revenue Authority (MRA) and Treasury on the matter.
“We agreed that the tax may be revisited, so we believe that something good is going to come out after we finalise all the consultations,” Hara said.
Recently Mabcata said the adjusted Withholding Tax Rate to 10 percent is high and the 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.
