The honeymoon is over for chiefs who have all along been spared from tax deductions from their honoraria as the Malawi Revenue Authority (MRA) has advised councils to start deducting tax from honoraria.
MRA spokesperson Steve Kapoloma said some councils have not been deducting 10 percent withholding tax from honoraria paid to chiefs and ward councillors when tax also targets honoraria paid to board members of various parastatals.
An MRA memo, reference MRA/DTD/POS/05/02, dated May 18 2018, and signed by MRA deputy commissioner operations, responsible for domestic taxes Rainne Vokhiwa is reminding some councils to start acting on the matter.
It partly says leave grant and honoraria payments are subject to pay as you earn (Paye) and withholding tax, respectively, according to the Taxation Act.
But the development has not gone well with some chiefs who are protesting the decision, saying the amounts that they receive are too small to be subjected to tax.
During his budget statement Finance Minister Goodall Gondwe announced a 100 percent increase to honoraria paid to chiefs.
The hike means the highest ranked traditional leaders—Paramount Chiefs—will be receiving K100 000, senior chiefs will be going away with K60 000 as T/As will see their honoraria rise to K40 000.
In a telephone interview on Tuesday Traditional Authority (T/A) Kapichi of Thyolo questioned the rationale behind the decision, calling it “retrogressive.”
“We take care of a lot of people, including widows and orphans. What is K60 000 to deduct tax from?” he said.
T/A Dzoole of Dowa, in a telephone interview on Wednesday, asked MRA to reconsider its decision.
“We have lobbied for this increase for a long time but we did not foresee government short-changing us in this way.”
T/A Nyambi of Machinga, in a telephone interview on Wednesday, lamented the move by MRA, describing it as a “stab in the back”.
T/A Chikulamayembe of Rumphi, in a telephone interview on Wednesday, said he was not surprised at the development.
Ministry of Local Government and Rural Development spokesperson Muhlabase Mughogho, in a WhatsApp response on Wednesday, said the ministry was waiting for clarification from MRA on the matter.
But on Wednesday Kapoloma said: “Those memos you have seen are a response to queries by some district commissioners who sought guidance on how they should treat honoraria in relation to tax.