Airtel Malawi still concerned with corporate tax

Airtel Malawi managing director Saulos Chilima says the telecommunications company is still concerned with corporate tax at 33 percent.

Chilima has pleaded with government to consider revising the rate downwards if government wants to encourage investment in the telecommunications sector.

“There was that introduction of an extra three percent from 30 to 33 percent on corporate tax which was levied on mobile telecom companies. Obviously, we were tempted to lobby against that, but it was rather too late,” he said in interview recently.

Chilima, who is also president of Association of Telecommunications Operators Limited (Atol), said Airtel plans to lobby for a revision of the tax rate during the mid-year budget review in February this year.  

 “That kind of tax does have an impact because you are taxing money that could have been declared as dividend for shareholders,” he said when asked on the impact of the tax hike on its business.  

Chilima said increasing corporate tax means increasing tax on money that could have been retained as profits to be invested in expanding the services that the company offers.

 “Already at 30 percent, it was high and increasing to 33 percent, it is just making it worse, but we are hopeful that perhaps with continued lobbying, government will be kind enough to listen to us to revise it downwards, either the way it was at 30 percent or perhaps further down so that they can encourage investment,” he said.

Chilima said the taxed money could also have been used to deploy additional coverage and expand the company’s footprints in the country.

But he assured that their business is here to stay and will continue to contribute to the country’s socio-economic development. 

“This business is here to create national employment. The business will continue to create business opportunities for Malawians and a lot of people,” added Chilima.

Finance Minister Dr. Ken Lipenga, who announced such a tax measure in the 2012/13 budget, said last week that government intends to further broaden Malawi’s tax base, but without penalising Malawians.

Lipenga said the corporate tax base is still narrow due to the status of the economy and that the value added tax base continues to be narrow since the list of exempted or zero-rated supplies is longer than in most countries.