Tax incentives a challenge to industry— Experts
Tax and financial experts have pointed out that the private sector will have to put in a stellar performance in light of tax cushions announced in the 2022/2023 national budget
They have also described the budget as a delicate move of balance as the cushions have been placed on an economy which is facing tight fiscal space and one which is trying to reduce borrowing.
Some of the notable cushions include the removal of Value Added Tax (VAT) on cooking oil and tap water, removal of import duty and excise tax on solar lamps and solar fridges, sanitary pads, reduction of value addition requirement to accommodate local manufacturers into industrial rebate scheme where duty and excise tax, and sometimes VAT, are not paid on raw materials
Institute of Chartered Accountants in Malawi (Icam) Chief Executive Officer Francis Gondwe touted the removal of VAT on cooking oil and tap water as timely.
On the revamping of the rebate system, Gondwe expressed optimism that reducing the value addition requirement from 35 percent to between 5 percent and 35 percent will encourage investments that will industrialise Malawi.
“At face value, the budget is good but we have to wait and see its implementation to classify it as such because implementation and execution are the most important parts in this,” he said.
A taxation expert Emmanuel Kaluluma said the removal of VAT on cooking oil and water means that the input VAT on these products will not be allowed as a deduction.
“Looking at all the taxation policies, government has opened up to investment and industrialization and it is up to businesses to make sure that the products that they are making can compete with imported goods,” he added.
Government has also removed withholding VAT system for business people, which it says was holding up their operational revenue.
Those in the betting game have reasons to smile as they will not face withholding tax for winnings of up to K100,000 while those gambling in casinos will only get to pay withholding tax for winnings that go beyond K500,000.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.