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Stakeholders call for tax regime change

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GAMA—The future is ICT

Economic stakeholders including the Malawi Confederation of Chambers of Commerce and Industry (MCCCI), the Institute of Chartered Accountants in Malawi (Icam) and the ICT Association of Malawi (Ictam) have emphasised the need for a downward revision or abolishment of certain tax lines in the 2023-24 national budget.

This, they say, would propel industry growth and in turn grow the economy.

This came out during a pre-budget consultation meeting hosted by the Ministry of Finance in Blantyre Monday.

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For example, MCCCI proposed the removal of Value Added Tax (VAT) on wheat flour, removal of 10 percent excise tax on non-alcoholic nutritional drinks, reduction to 30 percent excise tax on alcoholic beverages in plastic bottles with alcohol volume of 15 percent, removal of 10 percent excise tax on HDPE plastic crates and bottles, and widening the tax base from the untapped markets.

Other proposals from the chamber are that the government should grant VAT waiver on Escom charges for approved investors in irrigated farming operations, removal of 3 percent withholding tax requirement on subsistence farmers and removal of 16 percent VAT on non-banking services, among others.

MCCCI Chief Executive Officer Chancellor Kafelapanjira said government must consider with seriousness the tax proposals.

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“Of serious consideration is the need to promote manufacturing sector growth in the 2023-24 budget to offset the demand for imports, thus promoting import substitution and releasing some pressure from foreign exchange demand,” Kafelapanjira said.

Icam went on to suggest widening the tax base and putting in place deliberate policies that will propel the Malawi 2063 development agenda.

Acting Icam Chief Executive Officer Charles Chimpeni said the government should strengthen the taxation of the informal sector, engage local government infrastructure in tax collection, and capture the SME sector, among others.

Ictam President Clerence Gama stressed that lenience on some taxation lines that are linked to the ICT sector would make ICT services affordable to a larger percentage of the population, hence grow the economy.

Gama suggested a 5 percent reduction on software licences tax, exemption of 20 percent withholding tax on local software developers and revision of excise tax on telecommunications and bandwidth, among others.

“We have also emphasised the need for government to prioritise procurement of ICT services locally because with prioritisation on foreign firms, manufacturers of ICT gadgets do not recognise Malawi as a macro buyer and that affects negotiations during procurement,” Gama said.

Other stakeholders that attended the event implored the government to scrap off the Affordable Inputs Programme and focus on establishing mega farms in the country, adhere to international standards in allocating resources to pertinent sectors such as health and environment and address the exchange rate misalignment between Authorised Dealer Banks and the parallel market.

Minister of Finance Sosten Gwengwe expressed satisfaction with the turn-up of stakeholders and the public, adding that the proposals will be scrutinised and, where necessary, incorporated in the 2023-24 national expenditure plan.

“We have received very good proposals and I am happy because most of them are what the ministry was already discussing internally. Therefore, we will look at them and see which ones we can take on board for the betterment of the economy,” Gwengwe said.

The new financial year begins on April 1 2023.

The current budget, which is expected to come to an end in March this year, was pegged at K2.8 trillion.

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